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Platform Economy’s Role in Shaping Unified Domestic Market

May 20-2022   



The platform economy has mainly facilitated the formation of a unified domestic market for merchandise retail and consumer products, while its impacts on investment products have been less significant and further less so on enterprises’ intermediate input items, said Yu Changhua, Associate Professor of the NSD in a media commentary.

 

The rapid development of China’s platform economy is evidenced by the hefty increase in delivery volumes and e-commerce turnover for many years. Statistics show that the platform economy has driven cross-regional integration of product markets, especially consumer products markets. A key benchmark is the continuous shrinking of retail price disparities across regions since 2010. A similar, though less prominent, trend has happened to investment products. However, enterprise productive factors haven’t experienced significant price convergence despite the flourishing of the platform economy, noticed Prof. Yu.

 

Notwithstanding the benefits, the platform economy has brought ‘innovative destruction’, most notably the elimination of myriad macro, small and medium enterprises, which has caused job and tax revenue losses for local areas. Therefore, an important challenge is to harness the opportunities created by the platform economy while reducing its negative impacts on local markets and regional economies. Another challenge is to ensure the inclusiveness of the platform economy and promote fair competition. It arises from the fact that the platform economy has the characteristics of economy of scale and economy of scope, with large digital platforms exerting an outsized, and sometimes adverse, impact on the R&D of SMEs and on market competition in general. One more challenge concerns market oversight, said Prof. Yu. Digital platforms have morphed into a multi-leveled, multi-azimuth ecosystem, shattering regional and industry barriers and profoundly impacting on the Chinese economy both horizontally and vertically. That begs for an efficient and systemic market oversight, said Prof. Yu.

Platform Economy’s Role in Shaping Unified Domestic Market

May 20-2022   



The platform economy has mainly facilitated the formation of a unified domestic market for merchandise retail and consumer products, while its impacts on investment products have been less significant and further less so on enterprises’ intermediate input items, said Yu Changhua, Associate Professor of the NSD in a media commentary.

 

The rapid development of China’s platform economy is evidenced by the hefty increase in delivery volumes and e-commerce turnover for many years. Statistics show that the platform economy has driven cross-regional integration of product markets, especially consumer products markets. A key benchmark is the continuous shrinking of retail price disparities across regions since 2010. A similar, though less prominent, trend has happened to investment products. However, enterprise productive factors haven’t experienced significant price convergence despite the flourishing of the platform economy, noticed Prof. Yu.

 

Notwithstanding the benefits, the platform economy has brought ‘innovative destruction’, most notably the elimination of myriad macro, small and medium enterprises, which has caused job and tax revenue losses for local areas. Therefore, an important challenge is to harness the opportunities created by the platform economy while reducing its negative impacts on local markets and regional economies. Another challenge is to ensure the inclusiveness of the platform economy and promote fair competition. It arises from the fact that the platform economy has the characteristics of economy of scale and economy of scope, with large digital platforms exerting an outsized, and sometimes adverse, impact on the R&D of SMEs and on market competition in general. One more challenge concerns market oversight, said Prof. Yu. Digital platforms have morphed into a multi-leveled, multi-azimuth ecosystem, shattering regional and industry barriers and profoundly impacting on the Chinese economy both horizontally and vertically. That begs for an efficient and systemic market oversight, said Prof. Yu.