Platform Power and Subsidy Wars: Structural Distortions in China’s Online Food Delivery Market-Taking Meituan as an Example

Abstract

This essay examines the structural distortions and power asymmetries in China’s online food delivery market, focusing on the rise of Meituan and the subsequent hypercompetitive environment intensified by subsidy wars. While platforms such as UberEats and DoorDash in Western markets fostered balanced competition between restaurants, platforms, and consumers, the Chinese market evolved differently. Meituan consolidated monopoly power during the COVID era through commission fees, delivery charges, and exposure-based advertising schemes that disproportionately burdened small and medium restaurants. The later entry of Taobao and JD, rather than alleviating this imbalance, introduced aggressive subsidy strategies funded partly by merchants, further eroding profitability and creating conditions of negative gross margins. Consumers benefited from low prices, and platforms leveraged data advantages, but restaurants were reduced to expendable actors in a distorted market equilibrium. By analyzing market concentration, cross-subsidy pricing, and coupon-funded competition, this study highlights how unchecked platform dominance undermines industry sustainability and social welfare.