Advertising for attention in a consumer search model

Marco Haan and Jose Moraga-Gonzalez

No D/794, IESE Research Papers from IESE Business School

Abstract: We model the idea that when consumers search for products, they first visit the firm whose advertising is more salient. The gains a firm derives from being visited early increase in search costs, so equilibrium advertising increases as search costs rise. This may result in lower firm profits when search costs increase. We extend the basic model by allowing for firm heterogeneity in advertising costs. Firms whose advertising is more salient and therefore raise attention more easily charge lower prices in equilibrium and obtain higher profits. As advertising cost asymmetries increase, aggregate profits increase, advertising falls and welfare increases.

Keywords: Advertising; attention; consumer search; saliency (search for similar items in EconPapers)
JEL-codes: D83 L13 M37 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2009-05-03
New Economics Papers: this item is included in nep-bec, nep-com, nep-mic and nep-mkt
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Citations: View citations in EconPapers (23)

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Related works:
Journal Article: Advertising for Attention in a Consumer Search Model (2011)
Working Paper: Advertising for Attention in a Consumer Search Model (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:iesewp:d-0794

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