Beef up your competitor: a model of advertising cooperation between internet search engines

Arbeitspapier

We propose a duopoly model of competition between internet search engines endowed with different technologies and study the effects of an agreement where the more advanced firm shares its technology with the inferior one. We show that the superior firm enters the agreement only if it results in a large enough increase in demand for advertising space at the competing .rm and a relatively small improvement of the competitor's search quality. Although the superior firm gains market share, the agreement is beneficial for the inferior firm, as the later firm's additional revenues from a higher advertising demand outweigh its losses due to a smaller user pool. The cooperation is likely to be in line with the advertisers' interests and to be detrimental to users' welfare.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 870

Classification and Topics

• Classification: Wirtschaft ; Oligopoly and Other Imperfect Markets ; Contracting Out; Joint Ventures; Technology Licensing ; Information and Internet Services; Computer Software ; Advertising
• Subject: Search engine ; two-sided market ; advertising ; strategic complements ; technology ; Suchmaschine ; Internet ; Online-Werbung ; Technologie ; Lizenzvergabe ; Unternehmenskooperation ; Oligopol ; Wohlfahrtseffekt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Sapi, Geza ; Suleymanova, Irina
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/27393
• Last update: 10.03.2025, 11:42 AM CET