Intra-Platform Competition and Its Welfare Implications
Abstract: With the growth of traffic peaking, intra-platform competition has become a key issue in the platform economy. The core feature of intra-platform competition is a two-dimensional competition:there is both traffic data competition among different types of merchants to gain users' attention and price competition among the same type of merchants. In this process, by changing the rules of traffic data allocation, platform enterprises could guide the intensity of "rat race" competition among merchants, which will have an impact on the intensity of intra-platform competition. This paper points out that the key to attention competition lies in the differentiated business models adopted by live streaming merchants and traditional merchants in satisfying the heterogeneous preferences of consumers' attention, as well as the game played by merchants and platform enterprises around the distribution of traffic data in the public domain; and the key to price competition lies in the comparative advantage of the low-price model represented by "rat race" competition over platform enterprises in traffic data competition. For a comprehensive understanding of intra-platform competition, both dimensions are indispensable, and they influence each other to determine the general equilibrium of the bilateral market and consumer welfare. The analysis in this paper provides targeted policy recommendations to regulate the development of the platform economy and promote the sustainable development of the digital economy, and the related results serve as a useful supplement to enhance consumer welfare and clarify the direction of regulation.
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