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Search Advertising

Cornière (de), Alexandre (2016) Search Advertising. American Economic Journal: Microeconomics, 8 (3). pp. 156-188.

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Identification Number : 10.1257/mic.20130138


Search engines enable advertisers to target consumers based on the query they have entered. In a framework in which consumers search sequentially after having entered a query, I show that targeting reduces search costs, improves matches and intensifies price competition. However, a profit-maximizing monopolistic search engine imposes a distortion by charging too high an advertising fee, which may negate the benefits of targeting. The search engine also has incentives to provide a suboptimal quality of sponsored links. Competition among search engines can increase or decrease welfare, depending on the extent of multi-homing by advertisers.

Item Type: Article
Language: English
Date: August 2016
Refereed: Yes
Uncontrolled Keywords: search engine, targeted advertising, consumer search
JEL Classification: D43 - Oligopoly and Other Forms of Market Imperfection
D83 - Search; Learning; Information and Knowledge; Communication; Belief
L13 - Oligopoly and Other Imperfect Markets
M37 - Advertising
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 05 Nov 2015 15:11
Last Modified: 13 Mar 2021 12:28
OAI Identifier:

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