Market Structure Formation Mechanism of Bit Product

Bit products are those which are expressed in binary 0 and 1, they are distributed over data networks and stored in the form of bit stream. And the market structure of bit product differs from traditional physical products very much; there exist a widely popular phenomenon of “winner takes all” and long-tail market. This paper discusses what strengths the monopoly tendency while compelling the market environment becomes more competitive and why the structure is unstable. It’s the positive feedback of a synthetic function of economy of scale, network effect, lock-in effect and economy of scope that makes the market favor monopolization. At the same time, the short lifespan of bit product and differentiation guarantees the fierce competition. What’s more, technological innovations bring changes to market structures and accelerate the dynamic evolution.