Profit Of Two-sided Markets Internet Monopoly

As a recent central issue of industrial economics, two-sided markets has become the research focus of many researchers with the rapid development of the Internet industry. Two-sided markets generally consists of several platforms, with both sides of the platform are different types of users trading through the platform. In China, most of the Internet platform companies have two-sided markets characteristics, such as our well-known internet business platform, group buy platform and taxi platform. Research on the network effects and different user structures of two-sided markets has become a new entry way of economics Internet industry, and it is also where academic research interest lies.Under two-sided markets theory, this paper analyses profit of internet monopoly under different management strategies. Due to the special nature of two-sided markets, after the fierce market competition most of the Internet industry have moved toward the oligopolistic market structure. Internet monopoly managers face with the dual-platform operating on a single platform operating,so how to choose a better business strategy is the focus of this study. Through the two-sided markets cross-network externalities and multi-homing users, this paper build a model compared the earnings of enterprises in both operating modes based on research result of Armstrong(2006) and Christopher Muller(2014), it gives the corresponding management recommendations. Furthermore, since there is a difference of homogeneous and heterogeneous dual-platforms, the paper use Hotelling model to analyze heterogeneous dual-platforms.Further study shows with heterogeneous dual-platforms having different products or services, the change of user needs result in the change in corporate benefit. In this analysis there is a certain similarity under conclusions of homogeneous dual-platforms. The innovation of the article is that the analysis building a model to compare earnings under different management strategies with various cross-network externalities and multi-homing users.This paper conducted a descriptive analysis with several cases of Chinese Internet companies, such as the social internet business platform, the Internet media platform, the Internet taxi platform and group buy platform.Combined with these case studies, we have a more profound understanding of the two-sides market theory. Finally, on the inadequacies of research findings summarized, we point out the direction of further research and analysis.