The Analysis Of Two-sided Market Platform Equilibrium Under The Influence Of Quality

Two-sided markets theory is a new subject which rises at the area of industrial organization theory in recent years. It mainly focuses on the economic behaviors of two-sided consumers and platform which faces two groups of customers with network externalities between them. Research of two-sided markets is now at its beginning phase. Generally speaking, research of two-sided markets has important theoretical and practical meaning.This paper, from the angle of two-sided market enterprises, researches how enterprises should make decisions to maximize the profits in the different markets on different platforms form. First, this paper review the relevant literature at home and abroad from three types of two-sided markets which including market-makers,audience-makers, demand coordinator. Then the theoretical foundation has been carefully combed, including the different pricing, network externalities, attribution, transfer costs, exclusive behavior and product differentiation. Previous researches on two-sided markets always involve these theoretical foundations. However, this paper focuses on the enterprises'choice of quality level of the platform on the basis of our predecessors. And therefore, it is more related to vertical differentiation, as well as the static game model. We have also made a detailed presentation of them.This paper focuses on how platform enterprise should make decisions under monopoly and competitive market. In the part of monopoly model, this paper attempts to build a monopoly model and work out the optimal level of quality and price structure under the condition of profit maximization in two-sided markets by introducing the quality index in form of price verse performance ratio. On the premise of two-sided different parameters of demand, network externalities and cost, this article also deduces the optimal level of quality and price structure, and analyses the variation tendency of those parameters through computer simulation. The results showed that: for the variation of original demand and the network externalities, we should choose to lower quality level of platform; for the variation of cost-effective coefficient, fixed costs and marginal cost , improve the quality level of platform is a wise choice. In the part of competition model, this paper uses Taylor's vertical differentiation model for reference, and introduces the hypothesis of network externalities to establish a bilateral duopoly market model. We use Bertrand price competition to determine price, establish complete information static game, in order to determine the choice of high or low quality of platform. The study finds out: when the network externalities is positive, both of the two enterprises should choose a high level quality of platform; when the network externalities is negative, an enterprise chooses high-quality, and another chooses low-quality; when the larger network externalities is positive, the smaller is negative, the enterprise should choose a high quality level as the optimal strategy; on the contrary, an enterprise chooses high-quality, and another chooses low-quality. In the end, this paper selects television media platform as an example, and gets the same conclusion.