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A Comparative Study of Discriminatory Pricing Strategy of Platform Enterprises under Horizontal Merger

LI Zhi-wen, HAN Qi-ran, XIONG Qiang   

  1. (School of Management, Jiangsu University, Zhenjiang 212013, China)
  • Received:2018-02-23 Online:2018-05-22

Abstract: Based on the discriminatory pricing strategy of platform enterprise to new and old users, this paper builds a Salop model with three single-homing-user platforms competing against each other to analyze and compare the effect of platform horizontal merger on discriminatory pricing equilibrium. The result shows that the discriminatory pricing of platforms to the old and new users is related to the cross network externality after the horizontal merger; without considering cost saving factor, the result also shows that it is not necessary for platforms no matter the merged party or the non-merged party to give preferential treatment to new users, and platform′s discriminatory pricing strategy depends on the size of the cross network externality. In addition, whether platforms′ profit will increase or decrease after merge depends on the size of the cross network externalities. The above conclusions are helpful for the platform enterprises to judge the feasibility and rationality of the horizontal merger, or as the basis for the adjustment of the pricing of discrimination after the horizontal merger. At the same time, it also provides reference for the relevant regulatory departments to maintain market order.

Key words: platform enterprise, horizontal merger, discriminatory pricing