Market Concentration of Social Commerce Platforms: A Perspective of Regulation in a Developing Country

Abstract

Social commerce presents numerous business prospects in the current landscape (Xiang et al., 2022). However, concerns have emerged regarding the increasing concentration of the market and its potential economic implications (Azar et al., 2022). This study aims to examine the concentration levels within Thailand’s social commerce platform industry and explain the perspective of law and regulation. To assess market concentration, the Herfindahl-Hirschman Index (HHI), a widely used economic tool, was utilised. The HHI calculates the sum of squared market shares of all sellers, providing insights into competition effectiveness in a given market. This study also incorporated the method of documentary analysis. In the case of Thailand’s social commerce market, the study revealed an HHI of 4,474.27, indicating a relatively high level of concentration. This finding suggests that the market structure resembles an oligopoly, characterised by a small number of dominant competitors. In Thailand, popular social commerce platforms include Facebook, Instagram, Line Shopping, Twitter, and TikTok. However, new entrants in this oligopoly market face significant obstacles. Financial barriers, such as the substantial investment required to establish and promote a platform, pose challenges. Additionally, legal obstacles related to copyrights, patents, and other intellectual property rights must be navigated.

Keywords: Market Concentration, Social Commerce Platform, Law, Regulation