Advertising for Attention in a Consumer Search Model

Marco A. Haan and Jose Moraga-Gonzalez
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Marco A. Haan: University of Groningen

No 09-031/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

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)
Date: 2009-04-16
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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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:tin:wpaper:20090031

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