The Monopoly Process And Regulation Research Of Platform Industry

With the development of the Internet economy and the third industry,there are more and more platforms appearing on retail,catering,social,travel,tourism and other industries in China.The platform type industry is developing from competition to monopoly,however,"whether the platform which has the biggest market share in the two-sided market will form monopoly" is a controversial issue.Researches of the two-sided market from domestic and foreign scholars are immature.Theories about the pricing strategy and the platform competition are rich;however,researches about the form of platform monopoly,distinguishing standards,and the evolution mechanism form competition to monopoly are not perfected.The paper analyzed the monopoly process of platform type industry basing on the evolution perspective,by observing several platform type industries’ development path using qualitative analysis and case study.The paper found that variables like the pricing strategy,competition strategy,business layout and user switching costs on the level of platform,as well as industry characteristics like the degree of market concentration,the degree of platform competition,the user activity and the barrier to entry the two-sided market are changing along with the monopoly process.The paper gave a case study of the Internet travel industry to describe the monopoly process of platform type industry in detail.The paper divided the developing process of platform type industry into market start stage,rapid development stage and mature ecosystem stage basing on the competing situation.Through qualitative analysis the paper presented the monopoly evolution mechanism of the platform type industry,the distinguishing standards of platform monopoly,the government regulations,and the countermeasures from monopoly platforms.Variables such as the platform pricing,competitive strategy,business layout,user switching costs on the level of platform and the degree of market concentration,the degree of platform competition,the user activity,the barrier to entry the two-sided market on the level of industry present the corresponding evolution mechanism in different development phases of the platform industry.In the market start stage of platform industry,there are many platforms in the two-sided market and the competition along platforms is fierce.The degree of market concentration is low and the barrier to entry market is small.Platforms mainly adopt subsidy strategy to attract bilateral users and their business portfolio and profit pattern are single.Some platforms will exit the two-sided market because their users’ scale is less than a critical value or they can’t afford to fund pressure.Then,the degree of market concentration will be promoted,and the competition structure will be oligopoly.In the rapid development stage of platform industry,the platform competition strategy will turn from the homogeneous subsidy war to enhancing the platform differentiation and the diversity of profit channel.The integration between platforms with upstream and downstream enterprises or the merger along platforms will further improve the degree of market concentration and form into a pattern of two best and several strong platforms.The platform with the largest will eventually merge the platform with the second market share and dominate the two-sided market.In the mature ecosystem stage of platform type industry,the market share is concentrated in the monopoly platform.The monopoly platform has the voice to bilateral users and pricing power.After gaining the monopoly status,the platform will reduce subsidies to bilateral users and improve the overall price level,and gradually realize the winner-take-all.The paper presented distinguishing standards of platform monopoly in two-sided market:the monopoly platform has the voice to bilateral users;the monopoly platform controls the pricing power in two-sided market;the monopoly platform will build a multilevel ecosystem.The antitrust regulation measures for two-sided market need to standardize and guide the development of the platform industry,but not to hinder the innovation and development of the platform industry because of too strict regulation.The monopoly platform need to adjust the strategic direction in accordance with the regulation policies,accelerate the transformation and upgrading of the business model,and build a multilevel and opening platform ecosystem.