The Definition Of Two-Sided Markets Based On"Platformization" And Quality-Screening Mechanism

A new theory of industrial economics——two-sided markets emerged and developed along with the network economy. This theory provides an operation mode, through which company or organization acting as the platform operator, could enable interaction between multiple customers’ types witch are affiliated to it. The literature has constantly struggled, however, with a lack of agreement on a proper definition. The definitions of two-sided markets of previous studies almost are descriptive. However at this time there were only specific industries organized with two-sided markets’mechanism, and "platformization" also wasn’t treated as an operation mode. With the trend of "platformization", it gradually becoming an operation mode, and there are many companies and organizations characterred with two-sided markets. However the exogenously given descriptive definitions couldn’t apply to the "platformization" of the company and organization, which would lead to over-inclusiveness or under-inclusiveness.The definition of two-sided markets applied to "platformization" should refer to the construction of the platform, which meaning that based on this definition we could infer the value and the key factors of "platformization". Followed are the achievements of this dissertation:Firstly, we defined two-sided markets based on the "platformization":a company or organization that creates value primarily by enabling forming demand complementarity among different customer types. Here we consider that two-sided platform should be based on demand complementarity among different customer types, and platform could facilitate this complementarity forming through mechanism of "platformization". Two-sided market show endogenous. Platform could explore different customer demands and promote the formation of demand complementarity through the mechanism of platform, and then different customer demands would be met.Secondly, we also defined the cross-group network or inter-group network effect. A cross-group network effect arises if the at least the utility of at least one group depends on the number of users in the other group that join, stay or leave. Different from indirect network effect, cross-group network functions among different customer groups. And we also argue that the direction of cross-group network effect could be unidirectional or bidirectional, and cross-group network effect is essential to two-sided market.At last, quality screening mechanism is an important measure adopted by two-sided platform to control customer size. The ultimate goal of quality threshold set by platform operator is profit maximization affected by income, cost and mass distribution of customer. And we also argue that even when one group positively value the average product quality of other group, it is quite possible that the platform operator will not set quality threshold to exclude customer with low quality because customer’s preference over quality is not high enough. In that case, setting quality threshold decreases the platform’s profit.And in terms of costs, with greater customer size, higher customer quality, and more quantities, the platform would take more operational costs. And mass distribution of customer is also the important element to setting the quality threshold, which meaning with spread increasing, the platform could afford increasing the quality threshold of admission without excluding more farmers.Many scholars have been extending and deepening the theory of two-sided markets. At present, many small but significant improvements result in innovative achievements. The contributions in this dissertation are that we improve the definition of two-sided market based on "platformization", emphasize the importance of demand complementarity and customer size in "platformization", and also discuss the influencing factors of optimal quality threshold of platform through the model of quality screening mechanism in which the quality of one group is judged by other group.