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In Google We Trust?

Roberto Burguet, Ramon Caminal () and Matthew Ellman ()

No 717, Working Papers from Barcelona Graduate School of Economics

Abstract: We develop a model of the interacting markets for online content and offline products. We portray content providers and the search engine as competing platforms that intermediate in the product market (a horizontal relation), while also vertically related in the content market. Explicitly modeling both markets allows us to characterize the substitutability (and manipulability) of search and display advertising, and its effect on the incentives to distort organic search results as well as spillovers on the reliability of sponsored search results. Specifically, improvements in the technology for targeting display ads increases this substitutability and the threat of organic search distortions. Integration of the search engine that results in full monopolization of the display ad market improves search reliability and raises consumer and total welfare, if content providers are similar. However, partial integration, or full integration when content providers differ in their ad effectiveness, introduce additional incentives for distortion and may reduce consumer and total welfare.

Keywords: search engine bias; internet economics; vertical integration; two-sided markets; antitrust (search for similar items in EconPapers)
JEL-codes: L13 L41 L82 L86 (search for similar items in EconPapers)
Date: 2014-02
New Economics Papers: this item is included in nep-com, nep-ict and nep-mic
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Journal Article: In Google we trust? (2015) Downloads
Working Paper: In Google we trust? (2014) Downloads
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