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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/28445
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| Title: | Paid Placement: Advertising and Search on the Internet |
| Authors: | Chen, Yongmin - University of Colorado at Boulder
He, Chuan - University of Colorado at Boulder |
| Keywords: | Paid placement, Advertising, Auction, E-commerce, Search |
| Issue Date: | 2006 |
| Series/Report no.: | NET Institute Working Paper;06-02 |
| Abstract: | Paid placement, where advertisers bid payments to a search engine to
have their products appear next to keyword search results, has emerged
as a predominant form of advertising on the Internet. This paper studies
a product-di¤erentiation model where consumers are initially
uncertain about the desirability of and valuation for di¤erent
sellers products, and can learn about a seller s product through a
costly search. In equilibrium, a seller bids more for placement when his
product is more relevant for a given keyword, and the paid placement of
sellers by the search engine reveals information about the relevance of
their products. This results in e¢ cient (sequential) search by
consumers and increases total output. |
| URI: | http://hdl.handle.net/2451/28445 |
| Appears in Collections: | NET Institute Working Papers Series
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