Rationale behind

the issued rules

Team ID： Yes Yeah Yep Aye PRE067
Member：庄诗欣 Debby Zhuang 王昊之 Kyle Wong
周子越 Eva Zhou 左中晴 Corrine Zuo
School： Shenzhen Foreign Languages School
 Catalog

01 Background introduction 04 The influence on economy

Why did SAMR want to prevent

02 Basic concept of monopoly 05 monopoly and unfair competition

03 The effect of monopoly on industry, 06 Whether it is necessary to issue the rule

firms and consumers
01 Background
introduction
“China in November 2020 published draft rules aimed at preventing monopolistic
behavior by internet platforms, a move that will increase scrutiny on e-commerce
marketplaces and payment services belonging to the likes of Alibaba Group”,
Reported Reuters. China’s State Administration for Market Regulation (SAMR), which
issued the draft, said it wanted to prevent monopoly and unfair competition. It
looks to fight against behavior such as price discrimination among consumers,
compulsory collection of user data, and rules that prevent brands from selling on
different marketplaces.
02 Basic
concept of
monopoly
How to understand monopoly

Definition:
One firm constitutes the market or
industry where there are no close
substitutes available for consumers.
How to understand monopoly

Definition:
one firm constitutes the market or
industry where there are no close
substitutes available for consumers.

There is only a seller that compete

in national and global market.
How to understand monopoly

Definition:
one firm constitutes the market or
industry where there are no close
substitutes available for consumers.
How to understand monopoly
Example
Facebook is the leader in the social media
market with a maximum percentage of the
market share. It is considered to be a monopoly
because it lacks direct competition for any
competitor, it has the pricing power and it has
the dominant user base all over the world.
 The effect of
monopoly on
03
industry, firms
and consumers
 Industry
• Monopolies are price makers as they are both the industry and the firm
at the same time.

• Large monopolies have more capital to build better infrastructure

prevent the waste of infrastructure effectively

• Promote the development of technology

Limit of time Recoup their research costs during a certain time

 Firms
For firms which are willing to enter the
industry, they must face some high
barriers to enter
 Reasons

Government
power
 Reasons

Government Source control

power
 Reasons

Government Source control Economies of

power scale
 Long-run VS short-run
A marathon and a 50-meter race?
 Long-run VS short-run
The long run is when all resources used in production are variable
and supply can adjust to changes in demand .
The short run is where at least one production input is fixed and
supply cannot fully adjust to change in demand.
 Long-run VS short-run
The long run is when all resources used in production are variable
and supply can adjust to changes in demand .
The short run is where at least one production input is fixed and
supply cannot fully adjust to change in demand.

The firm could produce 800 to 1000

units more cheaply with plant size II
than with plant size I.
 Reasons

Government Source control Economies of Copyrights or

power scale patent
 Consumers

Demerits Merits
No bargining power Bringing with better products
Collection of perssonal statement Save money
Price discrimination
The influence on
04
economy
The influence on economy

When a monopoly controls all the market

share of a product, it can change the price
casually in order to profiteer.
The influence on economy

Doesn’t need to compete with ither firms→lose

motivation → is lack of innovative motivation

The new, high-efficiency but small-scale

firms are more probable to be acquired by
monopolies.
The influence on economy
The reward of getting patent
can encourage investment.

The impacts on economy are

more harm than good.
 Why did SAMR
want to prevent
05
monopoly and
unfair competition?
 Recently, with the fierce competition on
the Internet platforms, the restrictive
trading behaviour represented by “either-
or” has become increasingly normal,
which has bought serious impacts on the
market competition and the interests of
consumers. The amendment of the rules
can have a positive and effective impacts
on the purification of the competitive
environment on the Internet platforms.
The purpose of the rule is to prevent
monopoly and unfair competition and the
phenomenon of monopolistic behaviour
like price discrimination, compulsory
collection of user data and rules that
prevent brands from selling on different
marketplaces.
Price discrimination is a selling strategy
that charges customers different prices for
the same product or service based on
what the seller thinks they can get the
customer to agree to.
 Example
This is potentially unfair because
those who pay higher prices may
not be the poorest.
 How can the platform places
customer into different ranges?

the compulsory collection of user data.

Firms cannot ensure that our personal

information will not be split out and
exposed to hackers.
Monopoly is natural enemy of
open and fair competition.

Protect the open market environment,

promoting to form a fair, cooperated
healthy competition situation, and
encouraging firms to boldly explore
and innovate in an open market and
fair competition.
The protection and encouragement of
Internet exploration and innovation of
normal competition

The effective restraint of varieties

kinds of Internet monopoly behavior
06 Whether it is
necessary to
issue the rule
Necessary
The Internet platform is a multifunctional platform with extremely
rapid transmission speed and a large number of audiences.

The larger the audience, the lower the unit cost, the obvious scale
effect so that the more can reduce the user’s use costs.

The Internet sector, consequently, needs to be centralized.

Monopoly is relative to competitors while centralized management is
relative to the mode of operation.

The scope of influence of Internet giants is no longer comparable

to that of traditional enterprises.
In the process of the rule, there will be all kinds of obstruction,
interference, hindering the normal rule from working.

It strengthens the deterrence of the rule, which is conductive

to the implementation of measures such as investigation and
evidence collection, seizure and detention.
Thanks for your listening!
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