How Search Engine Impacts Market Structure: Empirical Evidence from a Multivendor Darknet Market

Despite the public’s familiarity with search engines, little existing research empirically investigates the impact of such a search-cost-reduction tool on online market structure. Knowledge scarcity of this question can mainly be attributed to the challenge of accessing detailed data from a cross-website search engine. Using data from the online illegal transaction platform, the Darknet markets, we manage to empirically evaluate the influence of a cross-website search engine (i.e., GRAMS) on the market structure at the vendor and product category levels. The results show that, although the search engine’s entry enhances the overall market performance, the benefit is more significant among leading vendors and popular products, contributing to a more concentrated market. Additional analyses provide empirical evidence that the trustworthiness and the scale-up ability of leading vendors can be the underlying mechanisms for the increased market concentration after the introduction of search engines into Darknet markets. Our study not only contributes to the literature on the dynamics of sales distribution in a multiple-vendor e-commerce market but also provides insights into understanding the operating dynamics of the Darknet markets, which can be helpful for law enforcement policymaking. This paper was accepted by D. J. Wu, information systems. Funding: D. Qiao acknowledges financial support from the Singapore Ministry of Education [Tier 1 Research Grant A-8001813-00-00]. S. He acknowledges financial support from the University of Florida, Warrington College of Business Summer 2022 Research Award. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.04133 .