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The Dynamics of Competition in the Internet Search Engine Market

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  • Gandal, Neil

Abstract

Search engines hold the key to helping consumers access the wealth of information on the web. In this paper I examine the evolution of and competition in the internet search engine market. The goal of my analysis is to examine whether early entrants benefit in the long-run from their first-mover position in internet markets. I find that while early entrants (Yahoo, Lycos, Excite, Infoseek, and Altavista) still have an advantage, the pure "brand effect" advantage has been declining over time. Yahoo has maintained its leadership position by providing a superior product. The success of a wave of recent new entrants suggests that entry barriers are still quite low in the internet search engine market.

Suggested Citation

  • Gandal, Neil, 2001. "The Dynamics of Competition in the Internet Search Engine Market," Department of Economics, Working Paper Series qt0h17g08v, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    • Handle: RePEc:cdl:econwp:qt0h17g08v
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    Cited by:

    1. Wang, Yuanshi & Wu, Hong, 2006. "Dynamics of a macroscopic model characterizing mutualism of search engines and web sites," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 363(2), pages 537-550.
    2. Iwanicki Grzegorz & Dłużewska Anna & Kay Melanie Smith, 2016. "Assessing the Level of Popularity of European Stag Tourism Destinations," Quaestiones Geographicae, Sciendo, vol. 35(3), pages 15-29, September.
    3. Pan, Bing, 2015. "The power of search engine ranking for tourist destinations," Tourism Management, Elsevier, vol. 47(C), pages 79-87.
    4. Tarantino, Emanuele, 2013. "A simple model of vertical search engines foreclosure," Telecommunications Policy, Elsevier, vol. 37(1), pages 1-12.
    5. Pavan, Giulia & Pozzi, Andrea & Rovigatti, Gabriele, 2020. "Strategic entry and potential competition: Evidence from compressed gas fuel retail," International Journal of Industrial Organization, Elsevier, vol. 69(C).
    6. Pollock, Rufus, 2008. "Is Google the next Microsoft? Competition, Welfare and Regulation in Internet Search," MPRA Paper 8885, University Library of Munich, Germany.
    7. Andrea Fosfuri & Marco S. Giarratana & Alessandra Luzzi, 2005. "Firm Assets and Investments in Open Source Software Products," DRUID Working Papers 05-10, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    8. Giarratana, Marco S., 2004. "Product strategies and startups' survival in turbulent industries: evidence from the security software industry," DEE - Working Papers. Business Economics. WB wb044816, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    9. Haynes, Michelle & Thompson, Steve, 2008. "Price, price dispersion and number of sellers at a low entry cost shopbot," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 459-472, March.
    10. Thomas A. Weber & Zhiqiang (Eric) Zheng, 2007. "A Model of Search Intermediaries and Paid Referrals," Information Systems Research, INFORMS, vol. 18(4), pages 414-436, December.
    11. Allen N. Berger & Astrid A. Dick, 2007. "Entry into Banking Markets and the Early‐Mover Advantage," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(4), pages 775-807, June.
    12. Avi Goldfarb, 2006. "The medium-term effects of unavailability," Quantitative Marketing and Economics (QME), Springer, vol. 4(2), pages 143-171, June.
    13. Dan Elfenbein & Josh Lerner, 2001. "Links and Hyperlinks: An Empirical Analysis of Internet Portal Alliances, 1995-1999," NBER Working Papers 8251, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Internet; Search Engines; Entry; Empirical Study;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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