Search Quality and Revenue Cannibalization by Competing Search Engines

23 Pages Posted: 11 Jul 2013

See all articles by Greg Taylor

Greg Taylor

University of Oxford - Oxford Internet Institute

Date Written: Fall 2013

Abstract

Consumers are attracted by high‐quality search results. Search engines, though, essentially compete against themselves because consumers are induced to substitute away from advertisement links when their organic counterparts are of high quality. I characterize the effect of such revenue cannibalization upon equilibrium quality when search engines compete for clicks. Cannibalization provides an incentive for quality degradation, engendering low‐quality equilibria - even when provision is costless. When consumers exhibit loyalty there is a ceiling above which result quality cannot rise, regardless of what the maximum feasible quality happens to be. Seemingly procompetitive developments may exert downward pressure on equilibrium quality.

Suggested Citation

Taylor, Greg, Search Quality and Revenue Cannibalization by Competing Search Engines (Fall 2013). Journal of Economics & Management Strategy, Vol. 22, Issue 3, pp. 445-467, 2013. Available at SSRN: https://ssrn.com/abstract=2292334 or http://dx.doi.org/10.1111/jems.12027

Greg Taylor (Contact Author)

University of Oxford - Oxford Internet Institute ( email )

1 St. Giles
University of Oxford
Oxford OX1 3PG Oxfordshire, Oxfordshire OX1 3JS
United Kingdom

HOME PAGE: http://www.greg-taylor.co.uk

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