Research On Measurement Of Market Power And Application Of The Two-Sided Market

Market power is the core concept of the industrial organization theory, and its measurement has been the focus of academic discussion. In recent years, large Internet companies frequently falling into the antitrust dispute, market power measurement received much attention. However, the existing methods can not be used to measure the unilateral charge of two-sided market and there are too many assumptions. So it is lack of convince when we applied to the reality case. Therefore, the research on the measurement method of two-sided market power has important theoretical and practical significance,Take the unilateral charge of two-sided markets for example, this paper explores the market power measurement from two aspects:direct method and indirect method. market power in this paper is the size that the price is higher than the marginal cost.Suppose the platform adopt nonlinear pricing, according to platform revenue maximization, in the monopoly market and oligarch competitive market. According to the sellers’ownership in oligarch competitive market, this paper established three model:single-homing, multi-homing and free of homing. After strict mathematical derivation, we get the final models.The model shows that the demand of "buyers" in oligarch competitive market is not the traditional demand, is the demand with sellers’ ownership. What’s more, the users’ loyalty also be added, which indicates the significance of the users’ loyalty to the platform. No matter what kind of the markets, for nonlinear pricing unilateral charge two-sided market, the models of market power measurement has something in common:platform pricing (including every transaction price and fixed price) is higher, the greater the market power of the enterprise; In equilibrium, the bigger the platform of price elasticity, the smaller the market power; The loyalty of buyers for the platform may also influence the market power of platform, the higher the loyalty, the greater the market power.Due to the certain difficulties in the application of the direct market power measurement, the majority of the international "anti-monopoly law" use the indirect method--market share--to define the market power of the companies involved. Market share is the prerequisite of the relevant market definition and SSNIP test is the mainstream approach in the relevant market definition. A good understanding of the essence of the assumed monopoly test, having studied the assumptions of the critical loss analysis and the demand analysis, the paper analyzes the two-sided relationship of unilateral charge two-sided market and rationally change the free side as market platform’s investment, so the two-sided market can be change into a single market, resulting that the SSNIP test can be applied in this special two-sided market. Considering the two-sided users’characteristics and its related relation, choose suitable and appropriate index from the market to assess the share of the enterprises in the market. Profitability is the ultimate goal of enterprises, so its income is an essential measurement index.Finally, in this paper, the year 2008 Tangshan Renren Ltd. appeal that Baidu abuses market power relying on its dominant market position. Whether Baidu has a dominant market position are analyzed in detail. The article analyzes the error of the original defendant and the court. Then according to the particularity of the companies involved, Analyze the applicability of direct method and indirect method in this case. "Baidu Case" can’t satisfy the assumptions of the direct method and this case must use the indirect measurement. Using the SSNIP test theory, with the combination of quantitative and qualitative methods to define the relevant market, coming to a conclusion:the relevant market of the case is not the plaintiff and the court defines--"Chinese search engine service market", also not the defendant said there is no relevant market, but online advertising market. In this market, regardless of the scale of advertising revenue, revenue share, or the searching user’s scale or usage, showing that baidu does not have a dominant market position in this market.The direct method of this paper has a positive effect on the development of the two-sided market theory. Its significance is far more than the market dominance. It has important significance for the market price theory and two-sided market mechanism research. In addition, the research on "Baidu" cases have important guiding significance in reality for antitrust.