Competition in the Korean Internet Portal Market: Network Effects, Profit, and Market Efficiency

Competition in the Korean Internet Portal Market: Network Effects, Profit, and Market Efficiency 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Competition in the Korean Internet Portal Market: Network Effects, Profit, and Market Efficiency

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Publisher
Springer Journals
Copyright
Copyright © 2011 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-011-9317-5
Publisher site
See Article on Publisher Site

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.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Aug 3, 2011

References

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