Search quality and revenue cannibalization by competing search engines

Journal article

Consumers are attracted by high-quality search results. Search engines, though, essentially compete against themselves because consumers are induced to substitute away from advertisement links when their organic counterparts are of high quality. I characterize the effect of such revenue cannibalization upon equilibrium quality when search engines compete for clicks. Cannibalization provides an incentive for quality degradation, engendering low-quality equilibria-even when provision is costless. When consumers exhibit loyalty there is a ceiling above which result quality cannot rise, regardless of what the maximum feasible quality happens to be. Seemingly procompetitive developments may exert downward pressure on equilibrium quality.

Authors: Taylor, G

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Wiley
• Journal: Journal of Economics and Management Strategy
• Volume: 22
• Issue: 3
• Pages: 445-467
• Publication date: 2013-01-01
• DOI: 10.1111/jems.12027
• EISSN: 1530-9134
• ISSN: 1058-6407