Aug 2026· Metroeconomica· 0 citations· 60 references
TL;DR
This study explains the paradox of widespread platform adoption alongside falling profitability in China's manufacturing sector, highlighting the need for firms and policymakers to balance platform engagement with productive investment.
Abstract
Using data from China's manufacturing firms (2011–2020), this study examines how digital platform adoption affects profit rates through two opposing mechanisms. The positive “turnover acceleration effect” enhances efficiency and reduces circulation time, while the negative “value extraction effect” reduces margins through platform monopolization and weakened bargaining power. When platform exposure exceeds a critical threshold, the negative effect dominates, causing declining profits. Platforms facilitate value realization but cannot independently create value. By adopting a Marxian framework of value and circulation with firm‐level empirical evidence, this study explains the paradox of widespread platform adoption alongside falling profitability in China's manufacturing sector, highlighting the need for firms and policymakers to balance platform engagement with productive investment.
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