nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2009‒06‒17
two papers chosen by
Walter Frisch
University Vienna

  1. Is Google the next Microsoft? Competition, Welfare and Regulation in Internet Search By Pollock, R.
  2. Is the Internet Bad News? The Online News Era and the Market for High-Quality News By Frijters, Paul; Velamuri, Malathi

  1. By: Pollock, R.
    Abstract: The rapid growth of online search and its centrality to the ecology of the Internet raise many questions for economists to answer: Why is the search engine market so concentrated and will it evolve towards monopoly? What implications does this concentration have for consumers, search engines, and advertisers? Does search require regulation and if so in what form? This paper supplies empirical and theoretical material with which to examine these questions. In particular, we (a) show that the already large levels of concentration are likely to continue (b) identify the consequences, negative and positive, of this outcome (c) discuss the regulatory interventions that policy-makers could use to address these.
    Keywords: Search Engine, Regulation, Competition, Antitrust, Technology
    JEL: L40 L10 L50
    Date: 2009–05–09
  2. By: Frijters, Paul; Velamuri, Malathi
    Abstract: We review and model the impact of the internet on the production and uptake of high- quality news. Our review of trends in the market for news suggests 3 stylized facts: i) particular quality news markets are dominated by merely a few providers, ii) demand for quality news appears stable, but provision of news has become specialized; mainstream news is decoupled from quality news, and iii) the dominant business model of internet news mirrors that of radio, television, and newspapers in that costs of news production are recouped via advertising. We build a stylized model that rationalizes these facts. Our model captures three conflicting effects: (1) economies of scale in the production of news lead to monopolies on particular markets, (2) easy access to information on the internet makes it cheaper to provide high-quality news and to disseminate it via the web, which increases the production of such news; and (3) the existence of bloggers and news aggregators who recycle the stories of news-providers reduces the effective property rights of high-quality news producers, thus forcing the business model of the internet to be advertising-based. For the most likely cases, our model would imply that the internet does not constitute bad news for the provision and uptake of quality news.
    Keywords: News quality; Internet; Monopolies; Search Costs; Advertising
    JEL: L82 L11 L15
    Date: 2009–05

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