Study On Vertical Restraints Dominated By Chinese Online Retailers

The theory of industrial organization is an important research field of industrial economics. Now the vertical restraints are the frontier area in the modem theory of industrial organization. With the arrival of the fourth retailing revolution, the online retail industry has been to the new backbone. Because of the unique characteristics, there have been online retailers who possess monopoly power. To maximize profits, the retailers can adopt various kinds of measures of vertical restraints to upstream producers. And these measures must affect the traditional retailers. So, the vertical restraints taken by the online retailers are worth studying.The thesis of this paper is to analyze the vertical restraints of the online retailers which have monopoly in the online retail industry according to its structure, conduct and performance. When study the behaviors, game theory was introduced and equilibrium was formed. The results of this study show that online retailer which has monopoly power must use wholesale price, Slotting allowance and Prepaid to achieve the vertical restraints to the upstream manufacture. And the equilibrium can achieve the maximum profit of vertical integration. The increase of the profit of big online retailer is not from the decrease of manufacture'profit but the result of the increase of retail market efficiency. Therefore, when the government enacts the policy about the development of the online retail industry, small and medium-sized enterprises should be encouraged to accelerate the development. And it should not to be restricted the measures of vertical restraints. Nowadays, our government is promoting the development of the online retail industry, so the result of this thesis will meliorate the market performance.This article is divided into six parts, the first part is to introduce the purpose and significance of thesis research, background, literature review, research methods and structure. The second part is to define the meaning of online retail and introduce the current situation. In accordance with the "structure - conduct - performance" model, next parts analysis the vertical restraints of the online retailers. Last part is the regulation for the vertical restraints, and there are some proposals about the development of the online retail industry.