Managing Web Sites for Profitability: Balancing Content and Advertising
HICSS '02 Proceedings of the 35th Annual Hawaii International Conference on System Sciences (HICSS'02)-Volume 7 - Volume 7
Sequential Product Positioning Under Differential Costs
Management Science
Journal of Management Information Systems - Special section: Strategic and competitive information systems
Information Goods and Vertical Differentiation
Journal of Management Information Systems
Electronic Commerce Research and Applications
The impact of search engine optimization on online advertising market
ICEC '06 Proceedings of the 8th international conference on Electronic commerce: The new e-commerce: innovations for conquering current barriers, obstacles and limitations to conducting successful business on the internet
Buyers' Choice of Online Search Strategy and Its Managerial Implications
Journal of Management Information Systems
Online consumer-to-consumer market in China - A comparative study of Taobao and eBay
Electronic Commerce Research and Applications
Special Section: Competitive Strategy, Economics, and Information Systems
Journal of Management Information Systems
Information Personalization in a Two-Dimensional Product Differentiation Model
Journal of Management Information Systems
Electronic Commerce Research and Applications
An Economic Analysis of the Software Market with a Risk-Sharing Mechanism
International Journal of Electronic Commerce
Use of Pricing Schemes for Differentiating Information Goods
Information Systems Research
Brand positioning strategy using search engine marketing
MIS Quarterly
Dynamic search engine competition with a knowledge-sharing service
Decision Support Systems
Dynamic Competition Strategy for Online Knowledge-Sharing Platforms
International Journal of Electronic Commerce
An economic analysis of user-privacy options in ad-supported services
WINE'12 Proceedings of the 8th international conference on Internet and Network Economics
User satisfaction in competitive sponsored search
Proceedings of the 23rd international conference on World wide web
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The Internet search engine market has seen a proliferation of entrants over the past few years. Whereas Yahoo was the early market leader, there has been entry by both lower-quality engines and higher-quality ones (such as Google). Prior work on quality differentiation requires that low-quality products have low prices in order to survive in a market with high-quality products. However, the price charged to users of search engines is typically zero. Therefore, consumers do not face a tradeoff between quality and price. Why do lower-quality products survive in such a market? We develop a vertical differentiation model that explains this phenomenon. The quality of the results provided by a search engine is inherently stochastic, and there is no charge for using an engine. Therefore, users who try out one engine may consult a lower-quality engine in the same session. This "residual demand" allows lower-quality products to survive in equilibrium. We then extend our model to incorporate horizontal differentiation as well and show that residual demand leads to higher quality and less differentiation in this market. Engines want to attract competitors' customers and therefore have a strong incentive to be "similar" to each other.