Research On Vertical Integration Strategy Of Platform Based On Two-sided Market

The e-platforms have obvious characteristics of two-sided market due to its special transaction mode,including network externality,asymmetric pricing,multi-homing and so on.Two-sided market characteristics make the competition between e-platforms and traditional enterprises different.The number of users to a platform become the main competitive objectives.But the choice of users by the demand preferences,the seller's business scale,platform pricing and other factors,and these factors make the uncertainty of user decision-making increase,likely to cause loss of users,thus affecting the platform competitive advantage.Therefore,the purpose of this paper is to study the e-platforms development strategy to attract and maintain users,to provide ideas for the development of the platform to help them choose the appropriate competitive strategy to achieve maximum utility and improve competitive advantages.In this paper,I use the two-sided market theory to study the oligopoly platform competition.In the model analysis,the typical characteristics of two-sided markets,network externalities,are taken as the main variables.This paper mainly analyzes the motivation of vertical integration in the bilateral market and the change of platform profit and the number of users before and after the vertical integration.At the same time,this paper analyzes how to choose which platform to trade on the basis of their own utility maximization.The results show that the implementation of the strategy of vertical integration platform in the number of users regardless of profit or not is superior to the implementation of vertical integration strategy platform,this is because the implementation of vertical integration platform after the part of the seller user is locked on the platform,the number of network externality under the action of users increased,more users will transfer the vertically integrated trading platform.Therefore,the vertical integration platform in the competition to get more users and higher profits,competitive advantage also highlights.