Paid Placement

Advertising and Search on the Internet

Bibliographic Data

ID9718323
AuthorsYongmin Chen (University of Colorado Boulder), Chuan He (0000-0001-5053-245X, Leeds School of Business, University of Colorado at Boulder)
Year2011
Volume121
Issue556
PagesF309-F328
Publication date2011-11-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/j.1468-0297.2011.02466.x
OpenAlexW3121533909
LanguageEN
Citations received11
References cited18

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

Advertising · Business · Information retrieval · Online advertising · Payment · Product (mathematics · Relevance (law · Search engine · The Internet · Valuation (finance · World Wide Web · Auction Theory and Applications · Computer Science · Consumer Market Behavior and Pricing · Digital Platforms and Economics · Mathematics

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