A Study On Car-hailing Platform Merger In Two-sided Market

Internet economy has been developed for many years,some traditional industries draw support from Internet to connect with online users directly.In this new business model,we can see that Internet platforms play core role,so problems about platform have been a central issue.Now,most Internet platforms are small but they develop very fast because they will merger other similar platforms.In last two years,there are many cases on platform mergers,even this appearance has been a current in the year of 2015.This paper argues that the pricing,operating model and competition in the Internet has a characteristic of two-side market,so when we research those problems,we have to seize hold of this characteristic and breakthrough traditional mindset.In many case of platform mergers,the public is most concerned about the car-hailing platform mergers.When the car-hailing was created in early 2014,it was in the dabate.However,it developed rapidly in two years time and cover major cities,many big car-hailing platforms such as DiDi and Uber arise.Platform mergers leads to public thinking,and this paper finds this merger meets the three features mentioned earlier.So,the research on the car-hailing platform mergers will not only help to control this merger,but also extended to other merger in the two-sided market.My paper will research the car-hailing platform mergers from three aspects:(1)This paper will introduce the basic situation of the car-hailing platform,and elaborate the characteristics of the two-sided market about this platform.The introduce includes the history and present current of the car-hailing to help to contrast changes before and after the merger,especially the price and industry specification.The elaboration of the characteristics of the two-sided market about the car-hailing platform will help us make a basis for the next research.After this research,I believe that the causes of the merger between the car-hailing platforms are pricing control and cross network externalities.(2)After the above study,this paper will regard pricing control and cross network externalities as two main motivations,and I will make three Hotelling models to explain these two motivations,I will call these three models as pre-merger model,independent dual platform model and single platform model.This paper will find three results after the research on these models:At first,when the merger conducts in the form of independent dual platform model,we will see the price and the platform profit increased,but social welfare declined.Secondly,when the merger conducts in the form of single platform model,the price,the platform profit and social welfare will all improved.Finally,when we compare these two merging models,the conduct of operating two platforms will help enterprise make more profit and less social welfare,so government regulation is necessary to guide the platform to make the right behavior.(3)This paper will do case analysis to explore the merger between DiDi and Uber.Firstly,I introduce the histories,present statuses and characteristics of this two car-hailing platforms,the merger between them will increase and cross network externalities.Then,I will divided the merger into two stages,in the first stage the merger will increase the ability to control price,and in the second stage the merger will see cross network externalities as a core.Finally,I will use the above models to analyse the case and focus on the price changes before and after the merger,the paper believes that this merge will end the vicious price competition,standardize users' behaviors,but we also need government regulation to guide the merger.At the end of the article,I will extend the car-hailing platforms merger to the merger in other areas.