Express Network Expansion Decision Research Based On Network Effects

Nowadays, in the express market in China, the development levels of express enterprises are uneven.Express market is changing from disordered state to ordered state. In China, foreign express enterprises have absolute advantage in international express business, and also threaten domestic inter-regional market to domestic enterprises, so, domestic enterprises are facing major development issues. Express network resource competition is the key to the development of enterprises. So, it is a strategy issue for express enterprise to make network expansion decision.Distinctive features of express services reflect the network effects.In economics, network effects are characteristics that the network value increases with the increacing number of network users. This paper proposes and argues the express supply network effects and express demand network effects. Direct-network effects of express supply network mean the goods interaction capabilities among nodes improve with the increase of the size of the supply network, and indirect-network effects mean improvement of timeliness, appearance of network economy and improvement from "complementary products". Express demand network effects are original driving force to make express service formulate networks. Direct-network effects of express demand network reflect the number of individuals that one customer can reaches with network extension, and Indirect-network effects of express demand network form from supply network effects.Then, based on network effects, paper analyzes the evolution of express network and way of network expansion decisions, and proposes a conceptual model based on the interaction.This paper research express network expansion decision problem from the perspective of network effects.Paper proposes the network expansion general decision model in a market which has two enterprises based on conceptual model. And the model is verified by an actual example.Then, sensitivity analysis is used in actual example from network size and unit cost angles. After above work, paper considers two kinds of network expansion in two situaitons which represent two typical network expansion processes.In one situation, paper considers the compatibility network expansion between two enterprises in one market from cooperation and non-cooperation angles respectively. Example shows that total profit of two enterprises in cooperation situation is more than in non-cooperative situation.In another situation, paper uses a three-stage dynamic game model to study the compatibility network expansion decision in two subdivisional markets having four enterprises. According to hypothesis, if unit costs don't increase after chosing compatibility, this problem has unique subgame perfect nash equilibrium that all the enterprises chose compatibility.