Name: Instructor name: Subject: Internet users usually have access to numerous website free of charge. This makes them shift from one site to another. Though these numerous websites are cost free for any internet user, in the real sense they distract the concentration and attention of internet user as they try to advertise products of their different customer (White and Kamal, 2012).This call for attention from internet user serves as the price charged by these sites…
Each website an internet user visit during his or her browsing session usually facilitate to the achievement of some objectives that are beyond mere identification of independent visitors to the site (White and Kamal, 2012).This similarity amongst all websites makes it easy for any person to note their relations to each other. When different website are complementary like search engine and content website, then internet users willingness to visit the combination of these sites depend on the rate of advertisement of each site (White and Kamal, 2012).This means that the number of visitors each site get per a specified period depends on its advertisement policy and frequency. So each website should keenly develop its advertisement strategies in an effective manner to ensure it attract higher number of visitors. In scenarios where complementary sites act independently, then their total distraction from their advertising becomes too high thus discouraging many internet users from visiting these sites. This makes it hard for these sites to maximize their total profits from advertisements. Secondly when complementary sites decide to operate independently, they end up allocating inefficient demands to attract internet user’s attention. When there are two competing companies with constant marginal cost that provides customers with perfectly complementary components, then overall business gains can be maximized only when one of the companies decides to lower it price to equal it marginal cost and the other firm freely adopt optimal price (White and Kamal, 2012).However, this fact does not apply to website owners when they opt to distract internet user from using their site in their attempt to advertise their sponsors’ product. This means that forcing one of the complementary sites not to advertise does not necessarily maximize total profits of the complementary sites. In fact, it can lead to decline in total profits of the two complementary sites due to lack of cooperation between them. While increased competition from a multiple complementary sites solves the problem of double marginalization, the competition, also leads to increased problem of mis'-marginalization. Effect of differentiation among content website To achieve greater efficiency, when the market is in equilibrium and all firms tend to behave non-cooperatively, and content website has relatively inefficient advertising technologies, then it is socially desirable that the website owners increase the number of content websites than the internet users induces to enter (White and Kamal, 2012). This is because an increase in the number of content websites shifts advertising away from the content websites to the more efficient search engine advertising technology. Effect of competition When two or more sellers who deals with complementary products engages in double marginalization, then to ensure that they all maximize profits, then they need to increase competition in all markets (White and Kamal, 2012).This is because if the market of one firm becomes perfectly competitive, then the other complementary firm can successfully charge a price that implements the optimum outcome of the industry as a whole. Otherwise if, a set of complementary websites, whose ...
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