Sources of Market Power in Web Search: Evidence from a Field Experiment

Hunt Allcott, Juan Castillo, Matthew Gentzkow, Leon Musolff and Tobias Salz

No 33410, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the forces behind Google’s large web-search market share. We develop a demand model with switching costs, quality beliefs, and inattention, and estimate it using a field experiment. We find that (i) requiring active choice barely increases Bing’s market share; (ii) Google users paid to try Bing update positively about its quality and many prefer to continue using it; (iii) many Google users defaulted into Bing do not switch back, consistent with inattention. Counterfactuals suggest that eliminating demand frictions doubles Bing’s market share. Successful remedies expose users to alternative search engines, while data sharing mandates have small effects.

JEL-codes: L4 L86 (search for similar items in EconPapers)
Date: 2025-01
New Economics Papers: this item is included in nep-com, nep-exp, nep-ind, nep-pay and nep-reg
Note: IO LE PR
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