Competitive dynamics of web sites

RePEc: Research Papers in Economics, 2000

We present a dynamical model of web site growth in order to explore the e ects of competition among web sites and to determine how they a ect the nature of markets. We show that under general conditions, as the competition between sites increases, the model exhibits a sudden transition from a regime in which many sites thrive simultaneously, to a "winner take all market" in which a few sites grab almost all the users, while most other sites go nearly extinct. This prediction is in agreement with recent measurements on the nature of electronic markets. SMM thanks the Fannie and John Hertz Foundation and the Stanford Graduate Fellowship for nancial support. We thank Eytan Adar and Lada Adamic for stimulating discussions.

International Journal of Industrial Organization, 2001

Search engines hold the key to helping consumers access the wealth of information on the web. In this paper I examine the evolution of and competition in the internet search engine market. The goal of my analysis is to examine whether early entrants benefit in the long-run from their first-mover position in internet markets. I find that while early entrants (Yahoo, Lycos, Excite, Infoseek, and Altavista) still have an advantage, the pure "brand effect" advantage has been declining over time. Yahoo has maintained its leadership position by providing a superior product. The success of a wave of recent new entrants suggests that entry barriers are still quite low in the internet search engine market. __________________________ I am grateful to Paul Geroski, Shane Greenstein, Jose Mata for many helpful suggestions and comments.

PLOS ONE, 2021

Ever since the web began, the number of websites has been growing exponentially. These websites cover an ever-increasing range of online services that fill a variety of social and economic functions across a growing range of industries. Yet the networked nature of the web, combined with the economics of preferential attachment, increasing returns and global trade, suggest that over the long run a small number of competitive giants are likely to dominate each functional market segment, such as search, retail and social media. Here we perform a large scale longitudinal study to quantify the distribution of attention given in the online environment to competing organisations. In two large online social media datasets, containing more than 10 billion posts and spanning more than a decade, we tally the volume of external links posted towards the organisations’ main domain name as a proxy for the online attention they receive. We also use the Common Crawl dataset—which contains the linkag...

Physical review letters, 2005

We model the evolution of the Internet at the Autonomous System level as a process of competition for users and adaptation of bandwidth capability. We find the exponent of the degree distribution as a simple function of the growth rates of the number of autonomous systems and the total number of connections in the Internet, both empirically measurable quantities. This fact place our model apart from others in which this exponent depends on parameters that need to be adjusted in a model dependent way. Our approach also accounts for a high level of clustering as well as degree-degree correlations, both with the same hierarchical structure present in the real Internet. Further, it also highlights the interplay between bandwidth, connectivity and traffic of the network.

In a network where users adjust their bit rate optimally according to their preferences as well as dynamic pricing signals, users can obtain the wanted class of service. E.g. users can obtain a constant bit rate by accepting a fluctuating price, or users can obtain a constant payment per minute by accepting a fluctuating bit rate. In this paper we consider a market for information transfer where ECN (explicit congestion notification) marks are used as dynamic pricing signals. We describe the welfare maximising allocation of network capacity in such a network, and then we proceed to consider the market equilibrium under

1999

In this paper, we analyze the e ects of brand loyalty and network e ects on the fortunes of Internet companies in an agent-based model. We nd that brand loyalty and network e ects produce interesting dynamics when included together in a simulated Internet which are very di erent from the dynamics observed when only one or neither of these e ects are present. If both brand loyalty and social communication are high, a loyal user can beconvinced to switch web sites, thus causing large and traumatic changes in the fortunes of the Internet companies.

Topics in Economic Analysis & Policy, 2000

This paper presents a model of competition between two advertisingfinanced media firms, and we apply the model to analyze competition between portals on the Internet. First, we show that equilibrium prices of advertising are actually higher the less differentiated the portals are perceived to be. Second, we show that aggregate profit for the portals increases if they form each their vertical alliance with advertisers. This is true even if there is perfect competition between the advertisers for advertising space. However, we also demonstrate that it may be individually profitable for one of the portals not to form a vertical alliance if the portals are close substitutes. In that case we end up with an asymmetric equilibrium with only one vertical alliance. This happens despite the fact that aggregate profit would be higher with two vertical alliances.

European Management Journal, 2004

Companies doing business on the Internet have experienced environmental turbulence from early growth and subsequent decline as businesses failed. The Internet provides a unique opportunity to examine the evolution of a business sector over a relatively short time period. Biological models to represent and predict the competitive dynamics within a business sector have been utilized. Using the analogy of strategies used in natural systems, this paper will demonstrate the applicability of using a model of population dynamics to companies that have survived the burst of the Internet bubble, specifically the cases of Amazon and eBay.

From its early days, the World Wide Web space has demonstrated strong agglomeration trends with a very small number of web sites capturing the larger part of the Internet population. At a first glance, agglomeration over the virtual space sounds as a paradox. Web sites are numerous and highly diversified and can be easily reached from everywhere and anybody, with no particular transportation or search cost. However, Internet users use only a small number of sites for searching for information and products, interacting with others and socialize, thus producing dense concentrations and locational patterns similar to those observed in the physical space where few cities and industrial clusters host the huge majority of population and the entire industrial activity. Is that depending on the attractiveness of the popular web sites or are there agglomeration economies providing incentives to users to be in a location which have been visited by other users or pointed-in by other sites? Thi...

This papers provides a framework for organizing empirical research on structural change in electronic commerce at the nexus between infrastructure and virtual activity. The framework identifies several key questions for understanding the evolution of the value chain underlying electronic commerce. The paper illustrates this framework on one example, the development of the commercial Internet access market. It also organizes its discussion of future research using the same themes, encompassing many classes of open issues. Policy for electronic commerce requires analysis for an evolving dynamic market, where the frameworks are rooted in an understanding of the economics of diffusion, adaptation and industry evolution.