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Competitive dynamics of web sites

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  • Maurer, Sebastian M.
  • Huberman, Bernardo A.

Abstract

We present a dynamical model of web site growth in order to explore the effects of competition among web sites and to determine how they affect 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 is in agreement with recent measurements on the nature of electronic markets.

Suggested Citation

  • Maurer, Sebastian M. & Huberman, Bernardo A., 2003. "Competitive dynamics of web sites," Journal of Economic Dynamics and Control, Elsevier, vol. 27(11), pages 2195-2206.
    • Handle: RePEc:eee:dyncon:v:27:y:2003:i:11:p:2195-2206
    DOI: 10.1016/S0165-1889(02)00121-5
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    References listed on IDEAS

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    1. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
    2. Deniz Yuret & Ayla Ogus & Michael de la Maza, 1999. "Modeling the Economics of Internet Companies," Computing in Economics and Finance 1999 152, Society for Computational Economics.
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    Cited by:

    1. Zhihong Tian & Zhenji Zhang & Ruize Gao, 2016. "Optimization in e-commerce market network based on value order parameter," Information Technology and Management, Springer, vol. 17(2), pages 187-197, June.
    2. Avila, Luz Angelica Pirir & Lee, Deok-Joo & Kim, Taegu, 2018. "Diffusion and competitive relationship of mobile telephone service in Guatemala: An empirical analysis," Telecommunications Policy, Elsevier, vol. 42(2), pages 116-126.
    3. Gupta, Ruchita & Jain, Karuna, 2016. "Competition effect of a new mobile technology on an incumbent technology: An Indian case study," Telecommunications Policy, Elsevier, vol. 40(4), pages 332-342.
    4. Ren, Jing & Sun, Hao & Xu, Genjiu & Hou, Dongshuang, 2023. "Convergence of output dynamics in duopoly co-opetition model with incomplete information," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 207(C), pages 209-225.
    5. Ren, Yawei & Yang, Deli & Diao, Xinjun, 2010. "Market segmentation strategy in internet market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(8), pages 1688-1698.
    6. Zhai, Shidong & Huang, Tao & Luo, Guoqiang & Wang, Xin & Ma, Jun, 2022. "Pinning bipartite synchronization for coupled nonlinear systems with antagonistic interactions and time delay," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 593(C).
    7. Wan, Xiaoji & Deng, Guishi & Bai, Yang & Xue, Shaowei, 2012. "The influence of learning and updating speed on the growth of commercial websites," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(15), pages 4018-4030.
    8. Stefani, Silvana & Ausloos, Marcel & González-Concepción, Concepción & Sonubi, Adeyemi & Gil-Fariña, Ma Candelaria & Pestano-Gabino, Celina & Moretto, Enrico, 2021. "Competing or collaborating, with no symmetrical behaviour: Leadership opportunities and winning strategies under stability," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 187(C), pages 489-504.
    9. Schmidt, Andreas U., 2006. "Multi-level markets and incentives for information goods," Information Economics and Policy, Elsevier, vol. 18(2), pages 125-138, June.

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    More about this item

    Keywords

    Winner-take-all; Competition; Dynamics; Equilibrium;
    All these keywords.

    JEL classification:

    • D59 - Microeconomics - - General Equilibrium and Disequilibrium - - - Other
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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