https://doi-002.org/1018/17591299548019
Lixuan Sun1,a*
1Economics and Management School of Fuzhou University 123456, Fujian, China
aEmail: sunlixuan2004@163.com
[abstract] The current wave of digitalization is sweeping the globe. Commercial digital platforms are impacting existing economic structures and business models at an unprecedented pace, and online consumption is becoming increasingly prevalent in various consumer scenarios. Against this backdrop, this paper examines the two scenarios in which ownership of personal consumer data belongs to commercial digital platforms and to individual consumers (workers). Based on three market structures—competition, oligopoly, and monopoly—we construct a mathematical model reflecting the characteristics of two-sided markets and analyze the nature of profits and rents on commercial digital platforms and their impact on social reproduction. The study finds that: first, the improvements in circulation efficiency and average profit margins achieved by digital platforms are prerequisites for production sectors to use platform services. Differential rent is a mechanism for transferring excess profits based on improved circulation efficiency, while monopoly rent is a mechanism for transferring average profits based on monopoly status and power. Second, data ownership can alter the distribution relationship between platforms and consumers, as well as the scale and structure of aggregate demand. The ownership of personal consumer data should balance improved circulation efficiency with the protection of personal privacy while promoting the sustained and stable operation of social reproduction. Finally, the lack of platform regulation will lead to platforms transferring data usage fees to consumers through the collection of monopoly rents, effectively rendering the profit distribution mechanism formed by data ownership confirmation ineffective. This article therefore suggests that platform regulation can allow for differential rents while preventing platforms from excessively squeezing average profits. This approach should consider the distributional trends of data rights in light of different economic characteristics and coordinate the design of platform regulation and data rights. This research helps clarify the impact of the different types of revenue generated by commercial digital platforms on social reproduction, improves the regulation of commercial digital platforms, and provides theoretical principles and policy implications for regulating commercial digital platform monopolies and optimizing the rights of individual consumer data.
- Introduction
In recent years, China’s digital technology and economy have experienced rapid development, significantly boosting productivity and economic transformation. The Chinese government prioritizes the development of the digital economy and actively promotes its deep integration with the real economy . With the rapid growth of the digital economy, the role of digital platforms, as a new form of production organization, has become increasingly important. Digital platforms can be categorized into different types based on their specific sectors and the businesses they engage in, and cannot be uniformly categorized. This article focuses on a specific type of digital platform that leverages personal consumption data and digital technologies to facilitate the exchange of goods and the realization of value for platform users. Because these digital platforms possess the characteristics of commercial capital , they can be referred to as commercial digital platforms. The role of commercial digital platforms in social reproduction lies in their ability to rapidly match supply and demand in transactions by collecting personal consumption data, enabling production and consumption to transcend time and space constraints, thereby accelerating the circulation and turnover of capital and promoting the efficient operation of social reproduction. Furthermore, because the businesses engaged in by commercial digital platforms often exhibit network externalities, they can attract diverse user groups through cross-price subsidies (Srnicek, 2017). In terms of their platform nature, commercial digital platforms fall into the non-production sector, rather than the production sector. This means that while they play an important role in circulation, they are not value-creating entities. Furthermore, commercial digital platforms can be further categorized into different types, such as B2B platforms, B2C platforms, and C2C platforms. To further focus the research, the two-sided market model constructed in this article attempts to incorporate both production and circulation within a unified analytical framework, focusing primarily on the most common B2C commercial digital platforms.
Commercial digital platforms are able to improve the efficiency of commodity circulation because they possess personal consumer data and can analyze it using intelligent algorithms. However, the possession of personal consumer data by commercial digital platforms also raises the following questions: While this data possession is conducive to improving commodity circulation efficiency, this data exclusivity has led some platforms to engage in monopolistic and unfair competition practices in their operations ; as a factor of production , how should ownership of consumer data be defined? Should platforms be allowed to use personal consumer data free of charge ?
Regarding the issue of rents on commercial digital platforms, Rochet and Tirole (2003) were among the first to propose a two-sided market model. The platform’s total revenue includes rental income. The platform, leveraging its control over user access rights and data management, derives monopoly power, enabling it to charge fees for transactions (Chen et al., 2022; Pitelis, 2022). Furthermore, the platform’s rental income can be further subdivided. Zhao Min (2022) pointed out that the revenue earned by commercial digital platforms from improving circulation efficiency is differential rent, while the revenue earned through price discrimination, search discrimination, and other factors is monopoly rent . Building on this foundation, this article, drawing on the literature on two-sided market theory and focusing on rental income, attempts to construct a two-sided market model for commercial digital platforms, breaking down differential rent and monopoly rent for in-depth analysis.
On the issue of monopoly regulation of commercial digital platforms , the academic community has formed three representative views: Scholars in the traditional Chicago School argue that the principle of platform regulation is whether the competitive behavior of platform companies affects the total social welfare. They believe that the network externalities of digital platforms will lead to higher market concentration in the digital economy (Tirole, 2023), and strict antitrust policies may lead to inefficiency or fragmentation (Weyl and White, 2014). Competing with this is the New Brandeis School (New Brandeis School). School). Khan (2017) argues that the principle of platform regulation is to protect competitive markets. Political economics, on the other hand, advocates that platform regulation should be based on whether it is conducive to the smooth operation of social reproduction (Wang Lu and Li Chenyang, 2021; Xie Fusheng et al., 2022). This article continues to focus on monopoly issues and the necessity of antitrust, considering different market structures. However, it adopts a political economics perspective and proposes a more comprehensive regulatory strategy that closely integrates data rights confirmation with monopoly regulation.
Regarding the ownership of personal consumer data , academics are currently debating how to define data ownership. The core of this debate is whether individuals can own their data. Some scholars argue that platforms are responsible for data collection, storage, processing, and utilization, making it difficult for individuals to participate ( Zhang Xinbao, 2023). Others argue that granting platforms ownership of personal data compromises individual privacy (Xiong Qiaoqin and Tang Ke, 2021). Furthermore, recent research has found that there is no optimal solution for assigning data ownership to either platforms or individuals. This article, while still focusing on data ownership and considering both data utilization and personal privacy protection, emphasizes a holistic approach based on the principles of political economy.
This article may make the following contributions : First, regarding the ownership of digital platforms and personal consumer data, Western economics primarily discusses platform behavior and its impact on social welfare based on two-sided market theory. In contrast, this article attempts to construct a two-sided market model for commercial digital platforms based on political economy theory, considering the multidimensional issues of rent and ownership . Second, regarding the nature of rent , previous studies have generally treated platform revenue as monopoly profit, failing to rigorously distinguish between the economic nature and social impact of average profit, differential rent, and monopoly rent. This article, however, attempts to construct a political economy two-sided market model, clearly defining the differential formation mechanisms of differential rent and monopoly rent, revealing their distinct roles in social reproduction , and innovating in the proportion of ownership, which may provide a theoretical basis for precise platform regulation.
- Theoretical Logic
2.1. The relationship between platform rents, regulatory measures, and data rights confirmation
First, a theoretical analysis of the nature of platform rents forms the theoretical foundation for platform antitrust regulation. Only by thoroughly analyzing the formation mechanism, basis for collection, and economic effects of platform rents can we form a scientific judgment on whether regulation is necessary. Second, the data rights confirmation system directly impacts the scale of platform rent collection. Simultaneously, the data governance framework should coordinate platform regulation and data rights confirmation design. If consumer data rights are granted without platform monopoly regulation, even if the platform pays data usage fees, the economic compensation received by consumers may still be recaptured by the platform through monopoly rents.
The core of “data rights confirmation” lies in defining the ownership of consumer data by platforms or consumers and the distribution of corresponding economic benefits. This ownership definition is the institutional prerequisite for the subsequent allocation of data usage rights and the protection of personal rights (such as privacy) (Shen Weixing and Li Xiaxu, 2023).
2.2. Nature and Functional Positioning of the Platform Economy
Platform enterprises fundamentally operate as commercial capital. Their core function is to facilitate the exchange of goods and the realization of value, thus falling under the non-productive sector. The cost of processing consumer data on the platform is purely a circulation expense and does not constitute a component of the value of the goods. Instead, it must be compensated by dividing the profits of the production sector.
It’s important to emphasize that non-productive sectors play an irreplaceable role in social reproduction. Commercial capital fulfills its non-productive function by accelerating the realization of commodity value. In the digital age, large platforms have become the core hubs of industrial chains and supply chains, their value realization efficiency far exceeding that of traditional commercial organizations.
Furthermore, determining whether a commercial digital platform creates value requires a detailed analysis of its business scope. However, this article focuses on theory and examines only the platform’s commercial operations.
2.3. Analysis based on the two-sided market theory
The core characteristic that distinguishes the platform economy from traditional commercial capital lies in its two-sided market structure: platforms do not directly buy and sell goods, but rather establish digital trading platforms to facilitate transactions and collect service fees. Producers must sell goods through platform channels, and consumers must rely on the platform to complete their purchases. This allows commercial digital platforms to impose a certain markup on product prices. Consequently, platform revenue can be broken down into three components: average profit, differential rent, and monopoly rent.
Political economics focuses not only on the impact of platform network externalities and cross-price subsidy mechanisms, but also on how commercial digital platforms in two-sided markets, through the profits and rents they collect, influence the reproduction of individuals and society as a whole. From the perspective of overall social reproduction, platform fees charged to consumers ultimately increase operating costs for both the production sector and commercial digital platforms. The average profits, differential rents, and monopoly rents collected by commercial digital platforms not only influence the current distribution structure but also, through accumulation, have a dynamic impact on the reproduction of society as a whole.
- Profits and Rents of Commercial Digital Platforms in the Two-Sided Market Model
3.1. Basic Settings of the Two-Sided Market Model
(1) Scenario 1: Assume that the economic system has only a single production sector, which produces goods and sells them to consumers. In this scenario, the following assumptions can be made:
Technical settings. Let the consumption involved in the production and circulation of 1 unit of goods by the production department be {(， )；(，) } → 1. Among them, (， ) represents the consumption of the production link. ac and lc are the amount of production materials and living labor time consumed in producing a unit of goods respectively. (，)represents the consumption and efficiency level of the circulation link. au represents the circulation cost required to complete the sale of a unit of goods. It is a consumption of its own products, that is, a certain amount of materialized labor and living labor expenditure. At the same time, according to the paid circulation cost au, it can be achieved that nu can be completed within T period. capital turnover. Let t be the time required for a single capital turnover, then t = T/ .The total time for a single capital turnover consists of production time and circulation time. Production time refers to the time capital remains in the production sphere, including both labor and non-labor time, and is determined by technology and management level. Circulation time refers to the time capital remains in the circulation sphere, including both purchase and sales time. Here, the setting of (，) primarily refers to the circulation time within the total turnover time. Ignoring production time, a specific circulation cost is set to determine a specific number of turnovers.
Setting the wage. Let b denote the wage in kind paid per unit of living labor time, that is, the amount of consumer goods paid to the labor force to maintain the reproduction of a unit of living labor.
Setting production prices and profit rates. Let p and r denote the production price and the average profit rate in period T, respectively.
The above assumptions all meet the conditions for the possibility of net output and the existence of profit. Based on the above assumptions, the production price system of the production sector in period T under scenario 1 can be expressed as:
For formula (1), since there is only a single sector, the production price p can be eliminated, and then r * can be obtained , see formula (2):
In the scenario where the production department completes the sale of goods by itself, given the production technology and wage b, the average profit rate increases with the increase in the number of capital turnovers, that is, > 0; and the average profit rate decreases with the increase in circulation costs, that is, < 0.
(2) Scenario 2: Introducing a commercial digital platform to circulate goods. In this scenario, the following settings can be made:
After the introduction of the commercial digital platform, there is no difference in the consumption of production materials and physical wages in the production link of the production department, which are still expressed as and b, and the production time required is ignored.
After the introduction of a commercial digital platform, the production department’s consumption and efficiency in the circulation process differ. In this situation, the production department no longer needs to circulate goods independently and no longer needs to pay for circulation costs, that is, .Since the goods produced by the production department need to be sold on the commercial digital platform, its capital turnover rate changes accordingly . Furthermore, assume that the commercial digital platform can promote the improvement of circulation efficiency.
Circulation Input and Efficiency of Commercial Digital Platforms. The consumption and efficiency of each unit of commodity circulation service provided by a commercial digital platform to the production sector are set as . where represents the materialized labor input of the commercial digital platform, i.e., the cost of digital equipment and algorithmic software required to provide circulation services; represents the living labor input, i.e., the living labor input of hired workers such as data algorithm engineers; represents the platform’s data holdings; represents the number of capital turnovers achieved by the platform for the production sector during period T, and represents the amount of services provided by the platform per capital turnover. The circulation efficiency of a commercial digital platform, then, depends on the amount of personal consumption data it holds and its ability to analyze and process consumer-generated data. The amount of personal consumption data held, in turn, depends on the market size of the commercial digital platform itself .
The two-sided market model of a commercial digital platform. The production department’s unit price for a commodity is , and the market price for a unit of commodity sold to consumers on the commercial digital platform is . The commercial digital platform’s own capital turnover rate is consistent with the capital turnover rate it helps the production department achieve, both assumed to be . Two further points are provided: ① – is the fee charged by the commercial digital platform for the circulation of each unit of commodity, which constitutes the source of platform revenue. If the production department pays in-kind wages to its employed workers, this portion of the fee is actually borne by the production department. ② The commercial digital platform only provides online transaction space and circulation services and does not require upfront capital to purchase the goods provided by the production department. This means that for the platform, payment is made after the transaction is completed, which is not included in the platform’s costs and does not correspond to average profit. Furthermore, the production price of the materialized labor consumed by the commercial digital platform in circulation is , while the market price of the goods purchased by the workers employed by the production department and the commercial digital platform is .
Cross-network externalities of commercial digital platforms. The service volume achieved in a single transaction on a commercial digital platform can be expressed as a function of the platform’s network externality effects, i.e. , , . Here, α and β represent the magnitude of the platform’s network externalities, and represent the number of manufacturers and consumers using the commercial digital platform, and , , and . Commercial digital platforms can only achieve greater service volume when the number of both bilateral users increases. Furthermore , network externalities attract more bilateral users to the platform, strengthening the platform’s incentive to increase the number of bilateral users. Furthermore, the above assumptions satisfy both the conditions for the possibility of net output and the conditions for the existence of profits.
3.2 . Average profit of commercial digital platforms
Assuming that ownership of personal consumer data is granted to commercial digital platforms through institutional arrangements for data rights confirmation, these platforms do not need to pay data usage fees to consumers. Furthermore, it is assumed that there are no efficiency differences between commercial digital platforms, meaning that all platforms have the same input costs and achievable circulation efficiency. Furthermore, it is assumed for the time being that commercial digital platforms do not have a monopoly on data or the market. These assumptions mean that there is no need to consider the differential rents and monopoly rents collected by the platforms. The competitive market structure ensures that their revenues consist solely of average profits, and goods are sold on the market at production prices. Different types of rents can be gradually introduced later. Onishi (2019) offers a perspective that the commercial sector can shorten circulation time, accelerate capital turnover in the production sector, and thereby increase its output and surplus value per unit period. This increased surplus value can offset the costs incurred by the commercial sector, effectively compensating for pure circulation costs.
This paper attempts to construct a two-sided market model. The production price system after the introduction of the commercial digital platform can be expressed as follows:
and average profit rate here . This article considers both the production and distribution stages together, so the cost price here encompasses not only the costs of production but also those of distribution. Since distribution costs include purely commercial services like wholesale and retail, this means that the production price here includes a portion of the cost price generated by non-productive labor. Furthermore, the average profit mentioned above represents the equivalent profit required for an equal amount of capital within a period T. This is influenced not only by the profit rate earned on a single capital turnover but also by the number of capital turnovers within a given period.
For formula (3), both the left and right sides of the first formula can be divided by at the same time, and both the left and right sides of the second formula can be divided by at the same time.
Let , we can get:
At this time, , , , are all exogenously given, and the production price system has two equations and two unknowns. Therefore, the relative production price and the average profit rate can be solved , and to ensure economic significance, the negative solutions are discarded, and we can get:
Based on formula (5), this paper analyzes the average profit of commercial digital platforms and proposes:
Proposition 1: Commercial digital platforms require average profits. Given that other conditions remain unchanged, the average profit rate increases with the increase in the number of capital turnovers, that is, >0; and decreases with the increase in the consumption of unit commodity circulation services provided by commercial digital platforms , that is, <0 and <0.
Compared with production departments that independently realize commodity circulation, commercial digital platforms can only maintain their efficiency advantage in the field of commercial circulation by continuously updating and iterating digital equipment and algorithm services, achieving faster capital turnover with less investment. Therefore, this article proposes:
Corollary 1: The production department will use the commercial digital platform to complete product sales only when:
The average profit earned by commercial digital platforms is the result of their participation in the profit rate averaging process as functional capital and is part of the fees they charge for transactions. The greater the average profit earned by commercial digital platforms, the greater their incentive to assist production departments in the circulation of goods, thereby increasing their own profits and social circulation efficiency. Production departments also favor the participation of commercial digital platforms in commodity circulation. This is because, while they may cede some of their profits to the platforms, they can also increase their capital turnover and their average profit rate.[①]
3.3 . Differential Rents for Commercial Digital Platforms
The ownership of personal consumption data is still given to commercial digital platforms, and multiple platforms with heterogeneous circulation efficiency are introduced to consider their differential rents. Based on the previous settings, it is assumed that there are two levels of commercial digital platforms, low-efficiency and high-efficiency, represented by superscripts 1 and 2 respectively. Let and represent the number of capital turnovers that can be achieved by production enterprises using the services of low-efficiency and high-efficiency platforms respectively. On the one hand, due to the existence of network externalities, the high-efficiency platform has more bilateral users and provides more services in a single circulation, that is, > , and the amount of data it possesses that can be mined is also larger, and the circulation efficiency is also higher. On the other hand, the algorithm of the high-efficiency platform will be more advanced and the computing power will be stronger, which can match supply and demand more accurately, that is, it can use less materialized labor and living labor input to achieve the circulation of unit products, that is, ( , )<( , ), its circulation efficiency is higher. Therefore, the high-efficiency platform helps the manufacturing enterprise achieve a greater number of capital turnovers during period T, that is, > .
Due to the introduction of different levels of commercial digital platforms, Equation (3) can be rewritten as the following four equations. Enterprises in the production sector will choose the services provided by different platforms, which will then lead to differentiated production prices. Therefore, the first equation in Equation (3) includes two forms, see Equations (7) and (8). Although commercial digital platforms are divided into two levels, the prices of goods sold to consumers are the same. Once the price of goods sold on a platform of a certain level increases, consumers will choose to purchase goods from another platform, thereby forcing the platform of that level to lower its price. Therefore, the second equation in Equation (3) also includes two forms, see Equations (9) and (10).
Here, z represents the total amount of differential rent collected by the platform from commodity circulation per turnover, and it is assumed that an inefficient platform cannot collect z1= 0. Using the solution method of the previous model, let ϕ c = a c , ϕ e = , , , , and , and solve for the differential rent, that is, z relative to the production price and the average profit rate , to obtain:
Combined with formula (8), the relative production price can be obtained , that is . Combined with formula (10), the differential rent collected by the high-efficiency platform from the unit commodity circulation can also be obtained , that is , that is:
After the introduction of differential rent, if the production prices, wage rates and profit rates of the two sectors are all positive, then the Perron -Frobenius theorem can guarantee that the differential rent at this time is non-negative ( Fujimori Yoshiaki , 2021).
and total profit rate of the high-efficiency platform in period T can be calculated , namely:
Similarly, only when the production sector is satisfied will it use the commercial digital platform to complete the circulation of goods. At this time, the differential rent collected by the commercial digital platform is equivalent to transferring the profits obtained by the production sector into its own excess profits that exceed the average profits.
Based on equations (12) and (13), this paper analyzes the differential rent of commercial digital platforms and proposes:
Proposition 2: The efficiency advantage of commercial digital platforms enables them to obtain differential rents. Ceteris paribus, the differential rent and excess profit rate of high-efficiency platforms increase with the increase in their capital turnover times, that is, and ; they decrease with the increase in the capital turnover times of low-efficiency platforms, that is, and ; since the increase in differential rent is unrelated to the average profit rate, it will inevitably lead to an increase in the total profit rate.
The differential rents collected by commercial digital platforms represent excess profits realized through improved circulation efficiency and are a portion of the fees charged by the platforms to production sectors. The more efficient a platform is, the greater the excess profits it generates for the production companies it serves, the more differential rent it can collect, and the higher its own excess profit margin. This incentivizes platforms to continuously improve their efficiency.
If there are different levels of commercial digital platforms in the market, the collection of differential rents has multiple impacts on production and circulation. The more differential rents a high-efficiency platform collects, the more incentive it has to acquire more personal consumption data and improve its own circulation efficiency. At the same time, under the pressure of market competition, low-efficiency platforms are also motivated to improve their own circulation efficiency, thereby increasing the average profit rate across society and supporting capital accumulation and expanded reproduction in the production sector. If low-efficiency platforms can narrow the efficiency gap, the differential rents earned by high-efficiency platforms will also decrease.[②]
- 4. Monopoly rents of commercial digital platforms
The ownership of personal consumption data remains with commercial digital platforms, allowing them to further extract monopoly rents. Next, we will distinguish between oligopoly and monopoly market structures, and explain the conditions and impacts of platforms extracting monopoly rents.
(1) Consider an oligopolistic market consisting of two types of platforms: low-efficiency and high-efficiency. In this case, the form of production prices in the production sector remains unchanged, see Equations (7) and (8). The monopoly rent collected by the commercial digital platform is expressed as a markup on the production price of the commodity. Therefore, the production price system of the commodity is transformed into a market price system, see Equations (14) and (15):
Here, s represents the monopoly rent that the platform collects from commodity circulation for each turnover. Using the solution method of the previous model, we set to 0 and let , , , , , , to solve for the relative market price and average profit rate , see Equation (16). It can be seen that is a function of the monopoly rent of the inefficient platform .
As can be seen from this, the average profit rate declines as the monopoly rent collected by inefficient platforms increases. The monopoly rent collected by commercial digital platforms essentially means that the platforms, through their monopoly power, transfer the average profits earned by the production sector into their own excess profits. If commercial digital platforms collect monopoly rent from the production sector, this naturally reduces the average profits earned by the production sector. If commercial digital platforms collect monopoly rent from consumers, since the production sector needs to pay consumers a fixed in-kind wage, the increase in commodity market prices will be reflected as an increase in the production sector’s costs, which will in turn reduce the production sector’s average profits.[③]
Similarly, only when the production sector uses the commercial digital platform to complete the sale of goods. Therefore, the commercial digital platform cannot increase the monopoly rent indefinitely, otherwise it will force the production sector to give up using the commercial digital platform.
obtaining , combined with Equation (8), we can obtain the relative market price , that is . Furthermore, given the differential rent collected by the high-efficiency platform , combined with Equation (15), we can also obtain the monopoly rent collected by the high-efficiency platform from the unit of commodity circulation , that is , see Equation (17). For the high-efficiency platform, since the differential rent it collects has been solved and determined in the previous article, its monopoly rent is expressed as a function of the monopoly rent of the low-efficiency platform .
In other words, in an oligopolistic market, if two tiers of commercial digital platforms reach a price alliance, they can jointly earn excess profits by collecting monopoly rents. This requires that the monopoly rents of the platforms meet . Furthermore, if these conditions are met, an increase in the monopoly rent collected by one platform will also increase the monopoly rent collected by the other platform.
It’s important to note that the above functional relationship reflects the nature of a monopoly pricing alliance. Furthermore, the stability of the alliance must be considered. If one party can increase its market share by reducing monopoly rents while maintaining its price, then the other party will have an incentive to deviate from the alliance. However, if long-term collusion mechanisms exist, the alliance can be maintained.
As previously assumed , after the introduction of monopoly rents, both tiers of commercial digital platforms can obtain excess profit rates based on their own average profit rates. Therefore, the total profit rate can be expressed as:
Based on equations (16) to (18), this paper analyzes the monopoly rents of commercial digital platforms in oligopolistic markets and proposes:
Proposition 3: Commercial digital platforms can also obtain monopoly rents. In an oligopolistic market, given that other conditions remain unchanged, the average profit rate decreases as the monopoly rent increases, that is ; the excess profit rate increases as the monopoly rent increases, that is ; the latter exceeding the former can increase the total profit rate.
As the monopoly rent collection of these two tiers of commercial digital platforms increases, their excess profit margins will rise, leading to a decline in their average profit margins. Because these platforms hold a monopoly position and command a significant market share, they can still achieve higher total profits by increasing their excess profit margins, even if they lower their average profit margins. However, this will negatively impact the reproduction of society’s material production sector.[④]
(2) Continuing with the previous assumptions, we can consider the existence of only fully monopolistic commercial digital platforms. In this case, the production price of the production sector is reduced to Equation (3). Furthermore, by adding monopoly rent to the production price of the commercial digital platform, the commodity production price system is also transformed into a market price system, as shown in Equation (19). In a fully monopolistic market, there are no platforms of different levels. Therefore, only monopoly rent is considered, and differential rent is no longer considered.
Using the solution method in the previous article, given the monopoly rent s collected by the complete monopoly platform from the commodity circulation for each turnover, let , , , , , , , we can solve the relative market price and average profit rate ;
Since there is no differential rent, the rent charged by the only commercial digital platform is purely monopoly rent, and its excess profit rate and total profit rate are in the form of:
Based on equations (20) and (21), this paper analyzes the monopoly rents of commercial digital platforms in a completely monopolistic market and proposes:
Proposition 4: Commercial digital platforms can also obtain monopoly rents. In a completely monopolistic market, given that other conditions remain unchanged, the average profit rate decreases as the monopoly rent increases, that is ; the excess profit rate increases as the monopoly rent increases, that is ; the latter exceeding the former can increase the total profit rate.
Without price competition between different levels of commercial digital platforms, a single platform can leverage its complete monopoly position to impose monopoly price increases, earning monopoly rents and thus reducing average profit margins. In this case, the maximum value of the monopoly rent cannot reduce average profit margins to the level achieved before the commercial digital platform was used. However, it is important to note that while the distribution efficiency of a commercial digital platform does not directly affect its collection of monopoly rents, it can indirectly influence the range of monopoly rents collected by altering the profit margins of the production sectors using its services. Furthermore, the minimum value of the monopoly rent should not be lower than the differential rent collected by highly efficient platforms in an oligopoly. Otherwise, the commercial digital platform will have no incentive to pursue complete monopoly. Furthermore, under a complete monopoly market structure, while the distribution efficiency of a commercial digital platform represents the average level of distribution efficiency in society, the platform will also have less incentive to increase the volume of data and the level of digital technology.[⑤]
- Two-sided market model that gives consumers ownership of their personal data
- The impact of granting consumers ownership of their personal data on the average profits and differential rents of commercial digital platforms
The above models all assume that commercial digital platforms can use personal consumption data free of charge and enjoy the benefits brought by it.
The data rights confirmation system gives ownership of personal consumption data to consumers, that is, workers. Therefore, if commercial digital platforms want to collect, process and analyze data, they need to obtain authorization from consumers and pay a certain fee to consumers.
Continuing with the previous assumptions, consider heterogeneous platforms. The production price form of the production sector remains unchanged, see Equations (7) and (8). The production price of commercial digital platforms needs to include data usage fees paid to consumers, see Equations (22) and (23):
Here, b+ represents the data usage fee paid by commercial digital platforms to each consumer, which can also be understood as the price consumers pay for their personal privacy, and represents the data usage fee paid by high-efficiency and low-efficiency platforms to consumers for completing the turnover of each unit of product. [⑥]It is important to note that platforms must pay not only their own workers but also those employed by production departments. This is because both types of workers are consumers in the process of labor reproduction, and their consumption behavior is carried out through commercial digital platforms. Furthermore, two simplifying assumptions are implicit here that do not affect the conclusions: 1) All workers have the same attitude towards their privacy, which results in the same data payment amount, b+; and 2) Workers employed by production departments and workers employed by platforms of a specific efficiency level who choose platforms of that level all purchase consumer goods within the platform.
Using the solution method of the previous model, given as 0 and , let , , , , , , , , , we can solve the relative production price and average profit rate respectively:
In a two-sided market structure, granting consumers ownership of their personal data will not only affect the distribution of benefits between consumers and commercial digital platforms, but also the benefits of the production sector, as both the production sector and commercial digital platforms will participate in the process of equalizing profit margins.
obtaining , combined with formula (8), we can obtain the relative production price , that is . Combined with formula (23), we can also obtain the differential rent collected by the high-efficiency platform from the unit commodity circulation , that is . Then, we can calculate the excess profit rate and total profit rate of the high-efficiency platform , that is:
Based on equations (24) and (25), this paper analyzes the impact of personal data ownership on average profit and differential rent, and proposes:
Proposition 5: Consumers’ data ownership will affect both the average profit margin and differential rent. Given that other conditions remain unchanged, both the average profit margin and differential rent decrease as the data usage fees paid by the platform to consumers increase, that is, and ; since differential rent does not affect the average profit margin, it will inevitably lead to a decrease in the total profit margin.
If the data usage fee (b+) paid by commercial digital platforms to each consumer is too high, this will, on the one hand, significantly increase the costs of both platforms, reduce average profit margins, and even cause production departments to abandon the platforms. On the other hand, it will also weaken the cost advantage of high-efficiency platforms over low-efficiency platforms, resulting in a decrease in the differential rents and excess profit margins collected by high-efficiency platforms. Therefore, if consumers are given ownership of their personal consumption data, it can increase their income and tilt the overall income distribution towards consumers, that is, workers. However, this will also lead to a decrease in the average profit margin of society as a whole and the profit margins of high-efficiency platforms, reducing the incentive for high-efficiency platforms to improve circulation efficiency.[⑦]
- The impact of granting consumers ownership of their personal data on the average profits and monopoly rents of commercial digital platforms
Ownership of personal consumption data remains with consumers, while commercial digital platforms are allowed to collect monopoly rents. Continuing with the previous assumptions, consider an oligopolistic market consisting of both inefficient and highly efficient platforms. In this case, the form of production prices in the production sector remains unchanged, as shown in Equations (7) and (8). By further adding monopoly rents to the production prices of commercial digital platforms, the commodity production price system is transformed into a market price system, as shown in Equations (26) and (27):
Using the solution method of the previous model, given that 0 and given and , let , , , , , , , , , , , we can solve the relative market price and average profit rate respectively:
Based on formula (28), this paper analyzes the impact of personal data ownership and platform monopoly rent on average profits and proposes:
Proposition 6: Consumers’ data ownership and the monopoly rents collected by commercial digital platforms both affect the average profit rate. Given that other conditions remain unchanged, the average profit rate decreases as the data usage fees paid by the platform to consumers and the monopoly rents collected increase, that is, and ; although the collection of monopoly rents leads to a decrease in the average profit rate, it can increase the excess profit rate, so the total profit rate can still be increased.
For the production sector, average profits are squeezed by both data fees and monopoly rents. For workers, or consumers, if data fees are paid in kind, they can indeed increase their consumption levels and materially alter social income distribution. However, if data fees are paid in monetary form, since the market price system will also change, consumption levels may not be substantially increased.
Similarly, according to the method of solving the model in the previous article, using the differential rent collected by the high-efficiency platform from the unit of commodity circulation solved above , we can also calculate the relative market price , the monopoly rent collected by the high-efficiency platform from the unit of commodity circulation , and the excess profit rate and total profit rate of the two-level platforms, namely:
If the data usage fee b+ paid by commercial digital platforms to each consumer is too high, this will reduce the platform’s average profit and differential rent, ultimately leading to a decline in its overall profit margin. In this case, commercial digital platforms will try to increase their profits by collecting as much monopoly rent as possible. Therefore, this article proposes:
Corollary 2: Commercial digital platforms can offset the impact of the decline in total profit margins caused by data payments by collecting monopoly rents. The conditions for collecting monopoly rents include: ① The two platforms must reach a price alliance; ② The increase in excess profit margins for both platforms from collecting monopoly rents can offset the resulting decline in average profit margins by Δ ; and ③ The increase in monopoly rents cannot cause the average profit margin to fall to the level it reached before the commercial digital platform was used, that is:
This means that by granting consumers ownership of their personal data, commercial digital platforms can actually transfer the data payments they receive from consumers by collecting monopoly rents. Therefore, data ownership confirmation and platform regulation need to be considered in a coordinated manner.
In summary, if consumers are granted ownership of their personal data through data rights confirmation and commercial digital platforms are allowed to collect monopoly rents, average profit margins will still decline as the data usage fees paid by platforms to each consumer increase. [⑧]This will clearly affect the reproduction of the production sector. For inefficient platforms, increasing the data usage fees they pay to each consumer will lead to a decline in average profit margins, and thus, a reduction in their overall profit margins. Given that inefficient platforms cannot obtain differential rents, they will tend to increase their collection of monopoly rents to boost their overall profit margins, which will undoubtedly lead to a greater decline in the average profit margin for society as a whole. Granting consumers ownership of their personal data will also constrain the differential rents collected by efficient platforms. Possessing more data will result in increased payments to consumers, while additional investment in improved algorithmic services will result in increased costs. If efficient platforms find it difficult to increase their overall profit margins by collecting more differential rents, they will be more inclined to form price alliances with inefficient platforms to collect monopoly rents.[⑨]
- Discussion
Building on previous research, this article focuses on commercial digital platforms and their impact on the economy, exploring the ownership of personal consumer data. It highlights the importance of data rights confirmation for the distribution of economic benefits and proposes regulatory recommendations. However, previous research has largely been based on the two-sided market theory of Western economics, focusing on market efficiency, consumer welfare, and platform competitive strategies. Discussions on data rights confirmation often remain at the legal and technical level, lacking a detailed distinction between the nature of rents. Furthermore, these models rarely incorporate specific market structures. Building on this foundation, this article, drawing on the principles of political economy, organically integrates theories of commercial capital, production prices, land rent, and monopoly prices to construct a mathematical model for analyzing commercial digital platforms under a two-sided market structure. The article proposes an analytical framework that comprehensively considers data rights confirmation, platform regulation, and social reproduction. However, this model makes some simplifying assumptions and only analyzes the impact of platform regulation and data rights confirmation on social reproduction from a static perspective. Future research should enhance the model’s explanatory and predictive power by introducing more variables and examining the dynamic interaction between platform regulation and data rights confirmation.
- Conclusions and Policy Implications
The main conclusions of this paper are as follows: First, regarding the composition characteristics of platform revenue , the overall revenue of commercial digital platforms can be divided into three components. Basic revenue reflects the reasonable return on the realization of value as a commercial capital participant; excess revenue has a positive effect on promoting technological innovation; and compulsory revenue has a suppressive effect on the process of social reproduction. Second, regarding the compound impact of data rights confirmation , while granting ownership of consumer data to end users can optimize the income distribution structure of workers, it will increase platform operating costs through a dual transmission path, restricting the room for improvement in circulation efficiency . Regarding the regulatory role of market structure , in a completely monopolistic market environment, the space for obtaining compulsory revenue is the greatest; in an oligopolistic market structure, platforms may form a revenue synergy mechanism to maintain a specific revenue level; and competitive market structures are most conducive to the formation of efficiency advantage revenue and technological progress, but it is necessary to guard against the risk of resource misallocation caused by excessive market concentration.
Based on these research findings, this article proposes the following policy recommendations: Establish a rent classification framework, allowing for retention and encouraging efficiency investment through tax incentives. Set a cap on platform markups and monitor platform revenue structures simultaneously. Design a complex data rights structure that grants consumers data ownership but authorizes platforms to use it for a fee. Furthermore, strengthen antitrust and property rights confirmation oversight , establishing relevant reviews .
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[①] For a numerical analysis of differential rents on commercial digital platforms, please refer to the appendix on the China Industrial Economy website (ciejournal.ajcass.com).
[②]the appendix on the China Industrial Economy website (ciejournal.ajcass.com ).
[③]If the production sector pays consumers a fixed monetary wage, the monopoly rent collected by the platform will affect consumption levels. However, the increase in commodity market prices cannot significantly exceed consumers’ purchasing power, otherwise consumers will stop purchasing daily necessities from the platform. Moreover, the collection of monopoly rent in this case will still reduce the average profit rate.
[④]For a case study analysis of monopoly rents of commercial digital platforms in oligopolistic markets, please refer to the appendix of the China Industrial Economy website (ciejournal.ajcass.com).
[⑤]For a case study analysis of the monopoly rents of commercial digital platforms in a completely monopolistic market, please refer to the appendix of the China Industrial Economy website (ciejournal.ajcass.com).
[⑥]For simplicity, this article exogenously defines the data usage fees paid by commercial digital platforms to each consumer . Theoretically, data usage fees can also be internalized through a Nash bargaining game. The demand for data elements on commercial digital platforms determines the upper limit of data usage fees, while consumers’ demands for personal privacy determine the lower limit. The ultimate level is determined by the bargaining power between the platforms and consumers.
[⑦]For a numerical analysis of average profits, differential rents, and data payments on commercial digital platforms, please refer to the appendix on the China Industrial Economy website (ciejournal.ajcass.com).
[⑧]The impact of granting personal data ownership to fully monopolistic commercial digital platforms will not be discussed separately here, as the conclusions are similar to those in oligopolistic markets.
[⑨]For a numerical analysis of average profits, monopoly rents, and data payments on commercial digital platforms, please refer to the appendix on the China Industrial Economy website (ciejournal.ajcass.com).