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 |
Files in This Item:
File | Description | Size | Format | |
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Chen-He_06-02.pdf | 198.11 kB | Adobe PDF | View/Open |
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