Welfare Analysis Of Competitive And Monopoly Of Two-sides Platforms

With the development of our modern economy, two-sided platform market is playing a more and more important role in our daily life. Suppliers of products and services are gathered with customers by the platform operators, who provide intermediary service for the two sides, rather than produce goods or else for the deal. Such as Telecom’s mobile added value service business platform, real estate medium, bank credit card platform, etc. Compared to direct selling, the intermediary reduces transition costs significantly by relating suppliers and customers.Due to the crossover network externalities, asymmetry on prices, substitution and complementary of the two sides, the regulation of two-sided platform market challenges the government a lot. This paper starts with a phenomenon observed in our daily life: in the media player two-sided platform markets, fierce competition has brought us lots of benefits, we can find the videos we enjoy easily; while due to the monopoly of platform we are able to make ATMs withdrawals and shopping around the country with a union pay bank card. Hence, this paper is focus on the welfare analysis of competitive and monopoly two-sided platforms.By using the game theory, industrial organization theory, microeconomics, this paper set a mathematical model to analysis the pricing and welfare in two different market structures---perfect competition and completely monopoly. Firstly, it indentifies the two types, aiming to give the government an accurate signal that two-sided platform market is for sure, and the range of it can be divided. Through the contrast of traditional market, we conclude how to judge a two-sided platform market, either perfect competition or completely monopoly. Then, with the help of the above analysis and previous literatures, it summarizes the factors impacting pricing in two-sided platform market. And based on this, it sets perfect competition and completely monopoly two-sided platform markets pricing models, which compares the welfare of the two and draws the conclusion and the government regulation suggestions. The main conclusions are:1, to regulate the structure of the two-sided platform market, we have to consider the demand functions on both two sides to the intermediary, or else the demand price elasticity. Then consider the two-sided platform network externalities size, which is depended together by customer demand curve, producer demand curve and demand functions on both two sides to the intermediary.2,intermediary under perfect competition is hard to survive, for that platform enterprises would formulate an access price even lower than the cost through fierce competition, at that time corresponding measures such as price subsidies taken by the government are necessary, and intermediary should be reorganized and merged. However, for the regulation of completely monopoly two-sided platform market, we only have to identify the markets and regulate the pricing.