The Research Of Price Competition Of Platforms Based On Differentiation

There are a large number of platforms in many industries of the economies as the Internet technology penetrating to social economy and all aspects of the social life. With the further development of technology, the cost of establishing a platform is less unattainable. It makes the number of platforms grow quickly and the price competition among platforms become fierce. Facing the intense price competition among platforms, platforms usually use the differentiation strategy to expand their user groups and improve the competition advantage.Because there are at least three parties in a competiton, in the platforms, the competition will be launched on two levels. One of them is the competition between users of the platform, the other is the competition between the platforms. Accordingly, there are two kinds of differentiation. One is the differentiation of service that platforms supplied and the other is the differentiation of products that sellers in the platforms supplied. Therefore, this paper studied the price competition of platforms based on these two levels of differences. This paper has widen the scope of differentiation and made up for the defects of existing research about the price competition of platforms. In addition, this paper also eased restrictions on the belonging behavior of users and considered that the belonging behavior are singlehoming and part of multihoming. So the conclusions we got has more practical meaning.Based on this idea, firstly, we defined the two kinds of differentions of platforms and rethought the network externality and emphatically elaborated that how the double differentiations affect the internal competition, foreign competition and belonging behavior. Finally, analysed the influence mechanism of double differentiations on price competition. On this basis, this paper hypothesis that the differentations of platform contained horizontal differentiation and vertical differentiation. In order to analyse the price competionwe under double differentiations and compared the results under horizontal differentation and vertical differentation, we introduced two competition model to study this problem. The results show that the price competion between platforms has a little differences under horizontal differentiation cases. But as a whole, the differentations of service that platforms applied can alleviate the price competition between platforms and the differentations of products that sellers suppied have no influences on price competition or aggravate the price competition between platforms. Compared to the results under horizontal differentiation, the results under vertical differentation can not describe as alleviation or aggravation. The service quality differentation can wide the price spread between two platforms. And the product quality differentation that the sellers supplied can increase the price of high quality platform and have no influence on the price of low quality platform. Finally, we chose a representative case of mobile Internet platform, I-mode, to verify the conclusion we obtained.