Vertical Integration and Antitrust in Search Markets

Lesley Chiou
2015 Social Science Research Network  
Antitrust regulators are concerned that vertical integration may allow a dominant firm in one market to lever market power into another market, and a broad theoretical literature has developed to show that in fact, the effects of vertical integration on other firms in the market are ambiguous. This paper studies how a dominant search engine Google in the upstream market of Internet search enters into different downstream markets. I find that Google's vertical integration either decreases or
more » ... eases clicks to other sites, depending upon whether firms compete in pricing or quality and whether consumers are very price-sensitive. The results have direct public policy implications as regulators determine antitrust policy in newly emerging markets.
doi:10.2139/ssrn.2663557 fatcat:cjcnf7mcd5eftiqhvevooui2oa