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Concentration in advertising-supported online markets: an empirical approach

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  • Avi Goldfarb

Abstract

This paper examines the causes of market concentration in advertising-supported online markets such as sports, news, and email. In particular, it is the first paper to explore the relationship between concentration and product differentiation, economies of scale, market size, advertising, content costs, and multi-market ownership in online markets. As expected, differentiated large markets with low content costs and little multi-market ownership are less concentrated. Furthermore, I show that advertising-supported online markets have much in common with the magazine industry.

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  • Avi Goldfarb, 2004. "Concentration in advertising-supported online markets: an empirical approach," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(6), pages 581-594.
    • Handle: RePEc:taf:ecinnt:v:13:y:2004:i:6:p:581-594
    DOI: 10.1080/10438590310001627893
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    References listed on IDEAS

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    1. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    2. Steven T. Berry & Joel Waldfogel, 1999. "Free Entry and Social Inefficiency in Radio Broadcasting," RAND Journal of Economics, The RAND Corporation, vol. 30(3), pages 397-420, Autumn.
    3. Schmalensee, Richard, 1989. "Inter-industry studies of structure and performance," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 16, pages 951-1009, Elsevier.
    4. Shane Greenstein, 1998. "Universal Service in the Digital Age: The Commercialization and Geography of U.S. Internet Access," NBER Working Papers 6453, National Bureau of Economic Research, Inc.
    5. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
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    Cited by:

    1. Shane Greenstein, 2011. "Nurturing the Accumulation of Innovations: Lessons from the Internet," NBER Chapters, in: Accelerating Energy Innovation: Insights from Multiple Sectors, pages 189-223, National Bureau of Economic Research, Inc.
    2. Avi Goldfarb, 2014. "What is Different About Online Advertising?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 115-129, March.
    3. Shane Greenstein & Ryan C. McDevitt, 2009. "The Broadband Bonus: Accounting for Broadband Internet's Impact on U.S. GDP," NBER Working Papers 14758, National Bureau of Economic Research, Inc.
    4. Stranger, Greg & Greenstein, Shane, 2008. "Pricing in the shadow of firm turnover: ISPs during the 1990s," International Journal of Industrial Organization, Elsevier, vol. 26(3), pages 625-642, May.
    5. Monic Sun & Feng Zhu, 2011. "Ad Revenue and Content Commercialization: Evidence from Blogs," Working Papers 11-32, NET Institute.
    6. Monic Sun & Feng Zhu, 2013. "Ad Revenue and Content Commercialization: Evidence from Blogs," Management Science, INFORMS, vol. 59(10), pages 2314-2331, October.
    7. Simon, Daniel H. & Kadiyali, Vrinda, 2007. "The effect of a magazine's free digital content on its print circulation: Cannibalization or complementarity?," Information Economics and Policy, Elsevier, vol. 19(3-4), pages 344-361, October.
    8. Greenstein, Shane, 2010. "Innovative Conduct in Computing and Internet Markets," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 477-537, Elsevier.

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