NON‐PRICE COMPETITION AND THE STRUCTURE OF THE ONLINE INFORMATION INDUSTRY: Q‐ANALYSIS OF MEDICAL DATABASES AND HOSTS

Competition will affect the structure of an industry and the structure will, in turn, affect the behaviour of the firms involved. Two of the most important characteristics of the online information industry are the diversity of hosts and the range of databases offered by each one. The latter is a significant factor in searchers' choices of databases and consequently encourages hosts to compete by acquiring additional databases. This type of non‐price competition plays a key role as it is difficult to make accurate comparisons of the costs of using different hosts. Parallels are drawn with other industries in which competition is, or was, expressed chiefly in the form of capacity. The structure of one sector of the online information industry was investigated by applying Q‐analysis to data on medical databases and hosts. Changes over a three‐year period are identified and are interpreted using concepts derived from ecological niche theory. Finally, the question of what would constitute an optimum structure is considered and it is argued on the basis of an economic theory originally propounded by H. Hotelling that free competition would be unlikely to produce optimal results.