Study On Information Selection Mechanism And Product Quality In Internet Platforms

In the past decade,the fast growth of Chinese internet economy and the problem of false information and fake and shoddy products formed bright contrast.As of June 2018,the number of Internet users in China reached 802 million,and the number of mobile Internet users reached 788 million.642 million Internet users use search engines frequently,and 569 million users often purchase online.The Internet platform has become an indispensable part of daily life.However,what lie behiNed the glory are false information and commercial counterfeiting behaviors,which are shocking."Baidu Putian Incident"."Weizexi Incident",Ctrip tying event,Taobao "Notoriois Market","E’lema Problem Restaurant","Mafengwo" plagiarism comments and many other typical cases exposed the defect of platform self-management and mechanism designing.False information and fake and shoddy products reflect the low quality of platform information,and the quality problems of related services and products caused by low-quality information in the platform,which is the key problem to overcome for the platforms in the process of transformation to high-quality development.Internet platforms has the characteristics of low transaction cost and economies of scale.They coordinate transactions base on the mastery of market information.Ranking,matching and adverting are their core business.Platforms shape the pricing method of"information" through auction ranking and advertisement.Finally,monopolistic control and strategic space are gained in the process of information transmission,while market friction and competitiveness are reduced as well.In the existing research,two-sided market theory explains the coordination problem of the multilateral users,but it rarely touches the problem of false information.Users are guided by the platforms’information,such issues involve auctions,principal-agents theory,but there is a lack of attention to the scale of the platform."Quality" is a relative concept.Under the constraints of limited information and cognitive ability,it is so difficult for individuals to make objectively optimal decisions as to fall into the quality dilemma.The nature of information problem of platforms is the problem of information selection and spread.Information is generated from market activities under platforms’organization,so platforms’ information quality problem can be divided into five aspects:First,are platforms willing to provide sufficient market information to both the supply and demand sides?Second,are platforms willing to promote a virtuous competitive mechanism?Third,are the platforms capable of achieving the best match between supply and demand through ranking?Fourth,is there any space for improvement in information asymmetry and regularity?Fifth,what is the logical starting point or effective principle for platform supervision?Focusing on the above five problems,this dissertation study the incentive mechanism of platform behavior by comprehensive application of two-sided market theory and principal-agent theory,taking information asymmetry as the starting point.In addition,the behavior of buyers and sellers in the platform are described under asymmetric information based on a large amount of platform data.Finally,the corresponding industry regulatory issues are discussed.This dissertation consists of eight chapters:the first chapter is the introduction,clarifying the problems,goals and methods of the research;the second chapter is the literature review;the third chapter is the platform characteristic facts which refines and summarizes the operation mode and characteristics of Internet platforms and provides the factual basis and theoretical starting point for the research;the fourth chapter analyzes the relationship between competition and platform information strategy;the fifth chapter is the strategic interaction between the platform and users,and the internal mechanism of the platform for product quality selection;the sixth chapter makes empirical research on the behavioral characteristics of the seller and the buyer and the role of platform mechanism under asymmetric information;the seventh chapter is the policy research which analysis the platform antitrust issues and advertising information supervision issues;the eighth chapter is the conclusion.Conclusions are as follows:First,competition at the platform level does not effectively improve the efficiency of information transmission.Users are always in a hard position to pay monopoly prices or obtain incomplete market information.Under the competitive conditions,the platform does not have the internal incentive to transmit complete market information.In the monopoly environment,consumers have to pay monopoly prices.In the competitive environment,consumers may obtain more information favorable to the platform and lack the disadvantage of the platform,which may lead to a prej udice in the perception of market information.Second,non-neutral platforms can be inclusive ofexaggerated or false information due to profit incentives,creating a potential crowding out effect on high quality content.Because the perceived utility of limited cognitive consumers on products or services will be affected by platform information,the platform’s bidding ranking mechanism can not only form a negative incentive for information and product quality,but also will be inclusive of exaggerated or false information.Third,when the participating manufacturers do not have capital advantages,the bidding ranking rules cannot constitute the selection mechanism for the survival of better quality.In the mechanism for the survival of better quality,high-quality manufacturers are willing to pay for a high ranking,but such price setting contradicts the auction advertising mechanism.Therefore,if the manufacturer does not have the difference in the original capital investment,the pure bidding ranking does not have effective institutional incentives for high-quality products.Fourth,there are obvious sellers’ strategic pricing behaviors in the Internet platform,which have a significant impact on consumers’ purchasing behaviors.The platform entry restriction rules have certain control effects on information asymmetry.The data analysis of China’s three major online shopping platforms shows that the degree of price changes in the platform,the probability of higher price,the occurrence of price increase behavior are positively related to the degree of information asymmetry,while the rational degree of consumer behavior shows a reverse relationship with the degree of information asymmetry.Fifth,the market share of platform dose not accurately match its market power.The contradiction between platform strategy behavior and technical efficiency is the theoretical basis of supervision.The EU’s judgment on Google Shopping reflects the concern of the platform submarket competition mechanism.The policy meaning of this dissertation includes:User cognition rather than market structure is the root of information quality problem of network platform.Platform competition is not enough to improve information quality.Reducing the loss of information efficiency caused by platform strategic behavior may be the key support of Internet platform supervision.In the platform economy,there is no necessary connection between market share and platform behavior.So we should be cautious about the traditional antitrust views.Platforms in a highly competitive environment have incentives to provide incomplete information to users.A non-neutral informarion selection mechanism will bring about a "bad coin phenomenon" and the platform should ensure the existence of a neutral screening mechanism.When there is only a bidding mechanism in the market and the ranking has an impact on consumer perception,the market will only choose the more expensive advertisements.Under the same capital constraints,manufacturers naturally prefer to produce low-cost products.The crowding out effect may formed a "bad coin phenomenon" in the entire industry in the long run.There is a trade of between the establishment of a neutral selection mechanism or bidding rankings for platforms.The supervision of the advertising in platform and the protection of consumer’s right to know and the private information needs to be further strengthened.The provisions on platform behavior of legal supervision systems like Antitrust Law,Interim Measures for Internet Advertising et al.are too board to be effective,and the current penalties are not sufficient to improve the platform’s motivation to enhance information screening.A clear understanding of the users on the information such as advertisements is the key to reducing the "bad coin phenomenon".The platform’s discriminatory pricing through big data analysis and information isolation will have a clear impact on social equity and reputation systems,potentially threatening market mechanisms.Privacy protection and big data regulation are imminent.