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...

Within the last three years, Google has acquired YouTube and DoubleClick and has attempted to control part of Yahoo!'s search advertising business. Two of the deals have not raised antitrust concerns by competition authorities. I review these deals with a focus on consumer welfare. Consumers are...

We develop a duopoly model with advertising supported platforms and analyze incentives of a superior firm to license its advanced technologies to an inferior rival. We highlight the role of two technologies characteristic for media platforms: The technology to produce content and to place...

In this paper we study the impact of search engine optimization (SEO) on the competition between advertisers for organic and sponsored search results. We find that a positive level of search engine optimization may improve the search engine’s ranking quality and thus the satisfaction of its...

Symmetric Nash equilibrium is a well-known refinement of Nash equilibrium in the study of bidding behavior of online advertisers on the sponsored search advertising marketplace. This solution concept, however, has major limitations. It allows for over-bidding and has uncompelling upper bounds....

Search engines enable advertisers to target consumers based on the query they have entered. In a framework in which consumers search sequentially after having entered a query, I show that targeting reduces search costs, improves matches and intensifies price competition. However, a...

The paper examined the possibility of an extension of Bedny's perspective of 'activity' theory as a framework for the elaboration of new online promotion channels, such as the search engines. This conceptualization was approached as a framework for Search Engine Optimization (SEO) contextual...

Poor user experiences with search advertisements can lead to ad avoidance thus reduce search engine’s long-term revenue. We capture the effect of negative user experiences on search engine’s future revenue in a new variable called “shadow costs” and examine the optimal keyword auction...

Sponsored search is the mechanism whereby where advertisers pay a fee to Internet search engines to be displayed alongside organic (non-sponsored) web search results. Based on prior literature, we draw an analogy between these markets and financial markets. We use the analogy as well as the key...

An important current trend in advertising is the replacement of traditional pay-per-exposure (pay-per-impression) pricing models with performance-based mechanisms in which advertisers pay only for measurable actions by consumers. Such pay-per-action (PPA) mechanisms are becoming the predominant...