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http://hdl.handle.net/10419/27393
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| Title: | | Beef up your competitor: a model of advertising cooperation between internet search engines  |
| Authors: | | Sapi, Geza Suleymanova, Irina |
| Issue Date: | | 2009 |
| Series/Report no.: | | Discussion papers // German Institute for Economic Research 870 |
| Abstract: | | 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. |
| Subjects: | | Search engine two-sided market advertising strategic complements technology |
| JEL: | | L13 L24 L86 M37 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des DIW DIW-Diskussionspapiere
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