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Internet Intermediaries' Editorial Content Quality

Author

Listed:
  • Alexandre Gaudeul

    (University of East Anglia - Norwich)

Abstract

Information intermediaries deliver information about a supplier's product. They are paid by those same suppliers they certify. This introduces conflicts of interests as the intermediaries want to retain customers by delivering truthful information about suppliers, while suppliers would want the intermediary to provide them with more customers than their quality would otherwise entitle them to. The paper compares two options for information intermediaries: either propose a menu of contracts to the suppliers so that they reveal their type, or find out by themselves the type of the supplier. In the first case, a rent must be left to induce type revelation, in the other, the intermediary must incur a cost to determine the type of the supplier. The paper shows that competition leads to a more frequent use of direct revelation mechanisms at the expense of independent research by the intermediary. The paper contributes to the literature on certification intermediaries in two sided markets by introducing a choice between relying on soft information or acquiring hard information about the side of the market to be certified, and by studying the influence of competition on contract choices in such an extended setting.

Suggested Citation

  • Alexandre Gaudeul, 2004. "Internet Intermediaries' Editorial Content Quality," Industrial Organization 0409005, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpio:0409005
    Note: Type of Document - pdf; pages: 43
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/io/papers/0409/0409005.pdf
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    References listed on IDEAS

    as
    1. Tano Santos & Jose A. Scheinkman, 2001. "Competition among Exchanges," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 1027-1061.
    2. Simon P. Anderson & Stephen Coate, 2000. "Market Provision of Public Goods: The Case of Broadcasting," NBER Working Papers 7513, National Bureau of Economic Research, Inc.
    3. Baye, Michael R. & Morgan, John, 2000. "A simple model of advertising and subscription fees," Economics Letters, Elsevier, vol. 69(3), pages 345-351, December.
    4. Michael D. Smith & Erik Brynjolfsson, 2001. "Consumer Decision-making at an Internet Shopbot: Brand Still Matters," NBER Chapters,in: E-commerce, pages 541-558 National Bureau of Economic Research, Inc.
    5. Guerra, G.A., 2001. "Certification Disclosure And Informational Efficiency: A Case For Ordered Ranking Of Levels," Economics Series Working Papers 9964, University of Oxford, Department of Economics.
    6. Strausz, Roland, 2005. "Honest certification and the threat of capture," International Journal of Industrial Organization, Elsevier, vol. 23(1-2), pages 45-62, February.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Gaudeul, Alexandre & Jullien, Bruno, 2005. "E-Commerce, Two-Sided Markets and Info-Mediation," IDEI Working Papers 380, Institut d'Économie Industrielle (IDEI), Toulouse.
    2. Animesh Animesh & Vandana Ramachandran & Siva Viswanathan, 2005. "Quality Uncertainty And Adverse Selection In Sponsored Search Markets," Working Papers 05-27, NET Institute, revised Oct 2005.

    More about this item

    Keywords

    Search engines; two-sided markets; information services; CPM; click-through; internet; intermediation; intermediaries.;

    JEL classification:

    • L - Industrial Organization

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