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I was told that the advertising market as a whole shrank after Google became part of the marketing industry. Apparently, the decrease occurred in offline markets as well as online markets.

Is this a valid historical example (outside of theory) where a large increase in competition in a particular market has decreased the size of that market or was the marketing industry affected differently by Google?

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It's worth noting that Google advertising is different from the advertising that it displaced. It's on the search results or index rather than on the content. Also, since it is targeted rather than broadcast, it may be more efficient than the advertising that it replaced. That could explain there being less afterwards. Finally, Craig's list is the real problem for many newspapers. It takes their most profitable advertising segment and delivers it more cheaply. –  Brythan Dec 8 at 4:05

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