In Google We Trust?

30 Pages Posted: 23 Dec 2014

See all articles by Roberto Burguet

Roberto Burguet

Instituto de Analisis Economico, CSIC

Ramon Caminal

Universitat Autonoma de Barcelona - Institut d'Analisi Economica, CSIC; Centre for Economic Policy Research (CEPR)

Matthew Ellman

Institut d'Anàlisi Econòmica (CSIC); Barcelona Graduate School of Economics (Barcelona GSE)

Date Written: December 23, 2014

Abstract

We examine the incentives of a monopolistic search engine, funded by advertising, to provide reliable search results. We distinguish two types of search result: sponsored and organic (not-paid-for). Organic results are most important in searches for online content, while sponsored results are more important in product searches. By modeling the underlying markets for online content and offline products, we can identify the sources of distortions for each type of result, and their interaction. This explicit treatment proves crucial for understanding, not only spillovers across markets, but also fundamental policy issues, such as the welfare effects of integration. In particular, integration of the engine with a small fraction of content providers is welfare-enhancing when incentives to distort are stronger for sponsored than organic search, but welfare-reducing in the opposite case.

Keywords: Search engine bias, internet economics, vertical integration, two-sided markets, antitrust

JEL Classification: L13, L41, L82, L86

Suggested Citation

Burguet, Roberto and Caminal, Ramon and Ellman, Matthew, In Google We Trust? (December 23, 2014). Available at SSRN: https://ssrn.com/abstract=2542168 or http://dx.doi.org/10.2139/ssrn.2542168

Roberto Burguet

Instituto de Analisis Economico, CSIC ( email )

UAB Campus
E-08193 Bellaterra
Spain
+34 93 580 6612 (Phone)
+34 93 580 1452 (Fax)

Ramon Caminal

Universitat Autonoma de Barcelona - Institut d'Analisi Economica, CSIC ( email )

08193 Bellaterra
Spain
+34 93 580 6612 (Phone)
+34 93 580 1452 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Matthew Ellman (Contact Author)

Institut d'Anàlisi Econòmica (CSIC) ( email )

UAB Campus
IAE-CSIC
E-08193 Bellaterra, Barcelona 08193
Spain
0034935806612 (Phone)

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

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