Competition in the Korean Internet Portal Market: Network Effects, Profit, and Market Efficiency |
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Authors: | Dong Ook Choi Jongeun Oh Yeonbae Kim Junseok Hwang |
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Affiliation: | (1) Department of Economics, University College London, London, WC1E 6BT, UK;(2) Department of Economics, National University of Singapore, Singapore, 117570, Singapore |
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Abstract: | Internet portals serve as platforms for coordinating advertisements, content, and user markets. We model portal structure with South Korean market data to explain network effects and other competition factors. We also analyze network effects on profit and market efficiency. The results indicate a negative network effect from banner advertisements in the user market, which is countered by a network effect from content provision. In the advertising market, the network effect from user demand is positively identified, which explains profit making through increased user visits. Furthermore, we show that network effects due to market concentration result in increases in consumer surplus. |
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