Heterogeneous Platform Competition

With the development of the Chinese economy and the trend of economic globalization,the Chinese market,with its vast consumption potential,continues to be favored by foreign capital.Foreign platforms have also gradually opened up their Chinese language services or opened up to the Chinese market.The subject of this paper is content-based platforms.The advantage of foreign content-based platforms is that they have unique foreign language resources so that they may have some influence on local content-based platforms.The advantage of local content-based platforms is that they have more native language resources.Take online reading platforms as an example,Amazon kindle platform has abundant foreign language original book resources,while domestic platforms iReader and Netease Snailread have many novels written by famous Chinese writers.As readers become more proficient in foreign languages and seek to explore new things,they are free to choose to spend money on either their own or foreign platforms.Therefore,the entry of foreign platforms may have some impact on the local platforms,which may intensify the competition between platforms and make the market share and profit of local platforms suffer on the one hand and bring new growth opportunities on the other hand.Therefore,based on this background,this paper constructs a three-platform competition model based on Hotelling’s model to analyze what impact the opening of foreign platforms to the Chinese market will have on the domestic platforms and what cooperation strategies the domestic platforms can adopt to better cope with it.In the existing literature,studies on platform cooperation have shown that platform interconnection can reduce transaction costs,enable platforms to gain more market size and profits and enhance social welfare.However,asymmetric platform interconnection can reduce the benefits of more robust platforms.Platform anti-monopoly is also an issue of great concern in the platform economy in recent years.The government has been strengthening the regulation of anti-monopoly and anti-unfair competition.Existing studies have also tried to address this issue from monopoly mechanisms,market dominance assessment,and anti-monopoly regulation.However,such literature mainly starts from the legal policy level and does not empirically or theoretically verify the harm of monopoly.Among the studies on language,the existing literature primarily focuses on the effects of common language and language distance on bilateral trade.Studies show that using a common language among trading countries,a smaller language distance or stronger national English proficiency will increase bilateral trade volume.Jeon D S(2021)first applies language factors to platforms,constructs monolingual and bilingual platforms,and studies indicators such as competition intensity and social welfare among platforms.However,only the case of all monolingual or all bilingual consumers is considered,and profits are not considered.So,this paper uses the model of that article as the basis to construct the competition between foreign platforms and national platforms.So the innovation of this paper is that:(1)multiple cooperation models between platforms are considered;(2)the international competition of platforms is constructed;(3)the impact brought by monopoly is analyzed theoretically;(4)The impact of different consumer language abilities on the choice of platform cooperation strategies is considered.After constructing the theoretical model,solving it,and analyzing the arithmetic examples,this paper mainly draws the following conclusions.(1)The intensity of competition among platforms is mainly influenced by three mechanisms:quantity,strength,and language.(2)When the proportion of bilingual consumers is low,the "Share" and "Reposition"strategies can bring more profit than the "Merge" strategy.However,as bilingual consumers increase,the "Merge" strategy can bring more profit to domestic platforms.However,as bilingual consumers increase,the "Merge" strategy brings more profits.Moreover,the"Merge" strategy always results in social welfare loss,while the other two strategies increase social welfare.(3)When the foreign platform is powerful,the domestic platform sharing will reduce the profit because the foreign platform has more economic power to adopt the low-price strategy to capture the market.However,at the same time,the profit will be reduced,which is a loselose situation.(4)The profits brought by the cooperation between domestic and foreign platforms are much larger than those brought by the cooperation between domestic platforms.However,this paper has some limitations,which can be further studied in the future.(1)The implementation cost of the strategy is not considered.In real life,the implementation cost of the "Merge" strategy may be higher than the implementation cost of"Share" and "Reposition".It is worthwhile to continue to study whether "Merge" will bring more profit value-added than the other two strategies.It will also have a greater practical significance for the choice of platform strategy.(2)Consumers are simply classified as monolingual and bilingual,without assigning specific language abilities to individuals.(3)This paper considers foreign platforms joining to the Chinese market,on the basis of which the future can consider how national platforms can go overseas and realize the internationalization process of platforms.