Research on Network Effect, Internet Platform Enterprise M & A and Social Welfare
2020
Based on bilateral market theory and cross-network externality theory, this article uses the hotelling m odel to study social welfare before and after horizontal mergers. The research results show that differences in consumer ownership behavior will affect the platform's pricing decision. On the platform, platform pricing depends on the cross-network externality and degree of differentiation; when consumers are mostly part of the platform, the platform is free for some multi-homed users and high-rate charges are charged for single-homed users; unlike traditional unilateral markets, Horizontal mergers. The social benefits of horizontal mergers of platform companies do not necessarily cause a reduction in social benefits. When the cross-network externalities meet certain conditions, the social benefits after horizontal mergers are greater than the social benefits before horizontal mergers. Governments can focus on cross-network externalities and the proportion of multi-homed users when conducting antitrust regulations.
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