The Competitive Strategy Of Large Retailer In Two-sided Markets

This paper takes retailing markets as two-sided markets, takes the large retailer as platforms and takes providers and consumers as the platform's two side users. So this paper focuses on the competitive strategy, especially the price strategy and user-number strategy, of large retailer as a platform provider in two-sided markets. We divide the large retailers'price strategy into slotting fee strategy and retailing added-prince strategy. We found that both the large retailer's slotting fee strategy and user-number strategy are greatly affected by the cross-group network externalities of the two-sided markets. We found that the large retailer would attract lots of consumers to take the advantage of the cross-group network externalities in the beginning. To maximize the profit, the large retailer would offer low price to the consumers with larger cross-group network externalities, and high price to the suppliers with lower cross-group network externalities. The slotting fees and higher retail price charged by the large retailer would partly compensate the cost and redistribute the externalities in the market, without lost of total profit of the society.