Platform Regulation In Two-sided Markets

Two-sided markets are established,when there are platforms that the' consumers and the sellers can trade with each other directly,which are different from the traditional unilateral markets.Though some industries came into being early,it was considered a separate transaction model in 21st century.It's an important innovation in the field of circulation,as it saves the transaction costs and improves transaction efficiency.Two-sided markets have become more and more popular,and as a result,it plays an increasingly important role in our daily life.The platform provider is the key of the two-sided markets,who connects the buyers and sellers,servicing them to make the market come into exist and function well.The bilateral market plays an important role and has wide range of impact,with an increasing number of different areas using it.However,at the same time,the cases in which platform provider erode the end users benefits is common in our daily life.Therefore,it is necessary to analyze the platform providers' behaviors to determine whether we should regulate them and how to do it in order to make sure the two-sided markets work well.This paper builds a mode to analysis the platform provider's behavior theoretically,based on the formation mechanism and the characteristics of the bilateral markets as well as the Game between the end users and the platform providers.On one hand,the characteristics that the two-sided market calls for the bilateral end users among whom there exists cross-network externalities,make the platform provider charge the end users different from the price-marginal cost theory and will occupy the end users benefits maximally.Meanwhile,due to above characteristics,the transaction parties don't have the bargain power with the platform provider.On the other hand,the platform provider regulates the end users transactions on the platform,while,in contrast,the end users can't regulate the providers' behavior.Therefore,it's necessary to regulate on the behaviors of the platform providers.Then this article goes on analysis how to regulate it from the theoretical and practical aspect.This article in the context of the bilateral markets,from market definition,market power,barriers to entry and social efficiencies four aspects,analysis the particularity of the platform provider regulation.Based on the above theoretical analysis,the regulation research is constituted by the following parts:the price,quality and information transparency of the service as well as fairness of the transaction.Then,the paper takes Taobao,the lagest net trading platform in China as an example.On the basis of the theoretical analysis and case study,the author comes to the final conclusion of this article and the outlook for future research.