Abstract: Rapid fragmentation of the ride-hailing market has led to issues like "difficulty in getting a car during peak periods and low user matching rate," for which resource-based businesses like Amap have begun to develop an integration model in which various travel service providers come together on an integrated platform to provide services to customers. Integration models can significantly aid small ride-hailing platform market entry, competition, and profit, however there is some influence from the growth of big platform firms. How to choose the integration approach for ride-hailing platforms is a crucial matter in light of this integration background. Using the two-sided market of ride-hailing as a backdrop, this paper develops a duopoly platform competition model based on the Hotelling model, which includes an integration platform(I) of small platforms(A) and a large platform(B), and investigates the integration strategy selection of large platform in different market environments and user characteristics. In this paper, we theoretically derive the bilateral market size decisions, platform bilateral pricing decisions, and the impact of pricing on customers shifting under the non-integration strategy (N), follow strategy (F), and open strategy (O). Further, numerical simulations are conducted to compare the profit levels of large platforms under different integration strategies. Cross-side network effect and customer’s travel cost are major factors influencing the adoption of large-scale platform integration solutions, according to the findings. Large-scale platforms prefer not to participate in integration when the customer-side and driver-side Cross-side network effects are both low. When the customer’s travel cost is below a certain threshold, the large platform adopts the follow strategy; otherwise, it does not participate in the integration. Interestingly, neither the driver's travel cost nor the commission ratio of the integration platform will affect the choice of large-scale platform integration strategy, which might explain the integration platform's early stage-free development strategy in reality.

Key words: two-sided market, ride-hailing platform, integration strategy, cross-side network effect