Open Platform Access And Bilateral Market Competition

The development of the Internet industry is a process of continuous transformation and innovation of industrial organizations.In recent years,many large-scale Internet platforms have undergone significant strategic changes-from inward vertical expansion to focus on building an open business ecosystem,from cultivating exclusive mode of self-derived platforms to largescale collaboration and sharing mode.This new Internet Ecology takes the "enabling" of the basic platform as an important feature.The basic platform makes use of its own traffic,data and ecological advantages to enable the downstream access platform to gain competitive momentum,which greatly affects the competitive pattern of the downstream platform market.In recent years,the rapid rise of new e-commerce is a typical case of rapid rise relying on access infrastructure platform.This application has become the third largest domestic trading platform in less than three years,which has caused remarkable changes in China’s business competition pattern.Therefore,in the open business model,the study of competition between downstream platforms or downstream bilateral markets should incorporate this enabling role into the framework of theoretical analysis.This paper argues that the economic essence of "enabling" is the positive externality of the underlying platform for downstream platforms or downstream bilateral markets,which may not only intensify the competition of downstream platforms,but also tilt the competitive advantage to some downstream platforms,so its impact on competition and user welfare may be very complex.At present,the research on bilateral market competition still focuses on inter-group externalities within the platform.Even considering the impact of upstream platform on downstream bilateral market,it is based on closed business model.Open business model requires to develop a new theoretical model from the perspective of crossplatform externalities,which can more accurately depict the competition in downstream bilateral markets and reflect the changes in prices,platform profits and user welfare.On the basis of combing relevant research and analyzing practical cases,this paper divides the mechanism of cross-platform externalities into three types: demand,cost and inter-group externalities,and introduces cross-platform externalities parameters based on the classical models of Armstrong(2006)and Choi(2010).The effects of cross-platform externalities on competitive equilibrium of downstream platforms under different mechanisms are studied through model deduction and data simulation.This study finds that when downstream platforms are in a completely monopolistic structure,cross-platform externalities will increase the profits of access platforms and reduce the pricing of users on both sides.However,different mechanisms of cross-platform externalities have different effects on the welfare of users on both sides of the platform.In the horizontal differentiated duopoly market,the profit of downstream platforms accessing the basic platforms increases,and the added value is proportional to the size of cross-platform externalities,while the profit of downstream platforms not accessed decreases.When crossplatform externalities are reflected in changing consumer demand,the pricing of the access platforms to consumers will rise,but the price of the access platforms will rise.It is competition that drives some of the benefits to be transferred to downstream platforms without access;when it is expressed as enlarging the inter-group externalities between consumers and merchants,the pricing of both platforms to consumers will reduce the downstream platforms without access,but the pricing of merchants will increase and decrease one by one;when cross-platform externalities are expressed as making access possible.When the marginal cost of the platform decreases,the relative size of inter-group externalities of the two downstream platforms will affect their respective pricing of users on both sides.The research also shows that under different user attributes,the platform profit of access to the basic platform will also increase.When downstream platforms present "competitive bottlenecks",if cross-platform externalities change the demand on the "bottleneck" side,the pricing of access platforms to consumers will rise,and the pricing of manufacturers will decline,while their competitors will be on the contrary;if cross-platform externalities affect inter-group externalities,platforms will make decisions for manufacturers.The higher the price is;when the role of cross-platform externalities is the size of inter-group externalities,the pricing of access platforms and independent platforms will increase for manufacturers,but the change of pricing for consumers is uncertain;if cross-platform externalities are manifested as reducing the marginal cost of merchants in access platforms,access will reduce access.The price charged by Platform B to merchants increases the price charged by independent Platform C to merchants.In short,cross-platform externalities can lead to platform-friendly outcomes.However,the above complex conclusions show that cross-platform externalities can not be simply considered to increase competition and benefit all users,which is obviously different from the unilateral market.This study shows that the distribution of benefits brought by cross-platform externalities among the main bodies depends on the specific organizational structure characteristics of downstream platforms.