A simple model of vertical search engines foreclosure

By means of a simple model with consumers' search, the paper analyzes a monopolistic general search engine incentives to bias organic and sponsored search results in order to favor an integrated website. In the model, manipulation takes place whenever the general search engine places prominently its own vertical search engine instead of the most relevant for consumers. The main finding is that the incentives to manipulate search results are stronger in the organic search case. In the sponsored search case the general search platform internalizes the impact of manipulation on profits, since the less a prominent vertical search engine is relevant to consumers, the lower is the price-per-click that the general search engine can charge. (C) 2012 Elsevier Ltd. All rights reserved.