User Base, Cross-group Externalities, Platform Entry And Regulation

Platform entry is the first step for platform to participate in the competition.Whether or not the platform can achieve the critical mass on both sides determines whether the platform vendors will entry the market successfully.Different from one-sided market,user base and cross-group externalities of two-sided markets will have an impact on user utility,thereby affecting the original user and new user's platform selection.The user base and cross-group externalities of the incumbent platform is a barrier to the entry of the new platform.The mechanism is that original users are locked on the platform through positive feedback of huge user base and cross-group externalities,which increases difficulty of the ability to access users about entrants and makes it difficult to break through the limits of the critical mass,so the incumbent platform will hind the successfully market entry of new platform.Based on the two-sided market theory,this paper analyses the impact mechanism of the entry barriers about user base and cross-group externalities of incumbent platform by establishing theoretical model,puts forward two theoretical hypotheses and carries out the relevant empirical test.As an economic developed country,the development of US mobile payment is far behind China.This may be closely related to the size of the payment card platform user base and the differences in the cross-group externalities.Based on the reality of the difference in the development of mobile payment between China and the United States,this paper selects mobile payment platform of China and the United States as the empirical test object,and uses the time series data of payment card platform and the mobile payment platform in the US and China from the first quarter of 2010 to the second quarter of 2017 to verify the above theoretical assumptions,then carrying on the corresponding robustness test.The results show that the user base of the incumbent platform constitutes a barrier to the entry of the new platform,and the greater the user base,the greater the strength of barriers to entry;The strength of the externality of the incumbent platform will also constitute a barrier to the entry of the new platform,weak cross-group externalities do not significantly affect the entry of new platform and it is not sufficient to form an entry barrier.As the cross-group externalities increases,the greater the strength of barriers to entry.The mature payment card platform in the United States not only has a strong user base,but also the cross-group externalities is far greater than that of China,so it has a strong ability to maintain original users and attract new users to join the platform and it's difficult for the mobile payment platform to compete with the payment card platform for users.Thus,it constitutes a powerful entry barrier for the new platform and it's hard for mobile payment platform to break through the limit of the minimum network scale and realize leap forward development.Compared to the United States,the user base advantage of the Chinese payment card platform is not obvious and the cross-group externalities strength is also weak,so its user acquisition ability is relatively poor and unable to form a powerful entry barrier to the mobile payment platform.Therefore,the ability for Chinese payment card platform to access users is relatively poor,and it can not make a strong entry barrier to the mobile payment platform.So the development of China Mobile's payment platform is far beyond the United States.With the rapid development of mobile Internet and the popularity of mobile phones,our payment card platform does not constitute a powerful entry barrier for mobile payment platforms,so new mobile payment platforms enter the market constantly.Although the aim to launch China Nets Union Clearing Corporation is to regulate capital flows,this also promotes the orderly competition of China's mobile payment platform.By comparing changes before and after the establishment of the China Nets Union Clearing Corporation,this paper holds that the profit of small platform will increase and the pattern of oligopoly will be relieved at a certain extent,and the competition of China's mobile payment platform will be promoted.