Competing with Exclusion: An Empirical Analysis of Alibaba’s Three-Year Rectification Outcomes

open_access
Open Access
Author:
Jiang, Jinhua
Area of Honors:
Economics
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
Robert Clifford Marshall, Thesis Supervisor
Sung Jae Jun, Thesis Honors Advisor
Keywords:
Platform Economics
China's E-commerce Market
Market Regulation
Abstract:
This thesis examines the effectiveness of Alibaba’s rectification from 2021 to 2024. As China’s largest e-commerce platform, Alibaba was fined 2.53 billion USD by the State Administration for Market Regulation in 2021, marking the largest fine in China’s regulatory history. The penalty targeted Alibaba’s practice of restricting merchants using its platform to selling exclusively on Alibaba’s own e-commerce platforms—a practice known as “exclusive dealing” or the “pick one of two” requirement (as opposed to competing e-commerce platforms). Exclusive trading restricts merchants from selling on different platforms, enabling market-dominant firms to weaken competition and stifle innovation. This paper employs a difference-in-differences framework to compare Alibaba’s gross profit margin with JD.com(the second largest e-commerce platform in China) and with Pinduoduo(the third largest e-commerce platform in China) between 2016 and 2024, while also analyzing cross-platform registration patterns at the merchant level during the rectification period. These findings suggest that, at the platform level, the rectification has harmed Alibaba’s revenue, though the significance of this effect requires further study. At the merchant level, the regulatory measures successfully encouraged merchants to register across multiple platforms. Overall, the findings support the view that the rectification restored fair competition among platforms. This study contributes to understanding how prohibitions on exclusive transactions affect platform behavior, merchant behavior, and market outcomes, and provides empirical insights into the regulatory effectiveness of China’s 2021 “Guidelines on Antitrust in the Platform Economy” within the platform economy.