Abstract: Digital finance has a heterogeneous impact on enterprises of different sizes, which may change the market monopoly by affecting the relative market power of enterprises. In the context of the rapid development of digital finance, exploring this change in market structure is of great significance to fully understand the role of digital finance and maintain the market order. This paper conducts an empirical analysis based on the heterogeneous enterprise model with the panel data of listed companies from 2011 to 2020. The findings show that in the monopolistic competition market digital finance has weakened the pricing ability of enterprises by reducing the necessary capital barriers for heterogeneous products, thereby reducing the corporate cost plus rate and their absolute market power. This weakening effect of digital finance on the cost plus rate is heterogeneous, i.e., stronger on small-scale companies and weaker on large-scale companies, which strengthens the market power of large companies relative to small companies and promotes the formation of market monopoly. The results of further research show that digital finance has a relatively greater impact on industries with higher necessary capital barriers and the degree of market monopoly in the western region. It means that, in the process of encouraging the development of digital finance, attention should be paid to the support and protection of the disadvantaged enterprises in the key industries, so as to prevent the disorderly expansion of capital taking advantage of the digital finance.

Key words: digital finance, market monopoly, cost plus rate, Herfindahl index