Exclusive Preferential Placement as Search Diversion: Evidence from Flight Search
Benjamin G. Edelman
Harvard University - HBS Negotiations, Organizations and Markets Unit
Harvard University - Department of Economics
April 28, 2013
Harvard Business School NOM Unit Working Paper No. 13-087
We analyze the incentives for a two-sided intermediary to divert consumers to its favored destinations. Using a quasi-experiment to control for search intent, we identify and measure the impact of a search engine's exclusive award of preferential placement to its own service. We find that Google's differential placement of its Flight Search service led to a 65% decrease in click-through rates for non-paid algorithmic links and an 85% increase in click-through rates for paid advertising listings of competing online travel agencies. Moreover, the exclusive integration of search engine services into search results disproportionately impacted traffic to popular sites.
Number of Pages in PDF File: 37
Keywords: search diversion, search engines, platform design, industrial organization
JEL Classification: L21, L40, L86working papers series
Date posted: April 16, 2013 ; Last revised: April 29, 2013
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