Targeted search and the long tail effect

Huanxing Yang

RAND Journal of Economics, 2013, vol. 44, issue 4, 733-756

Abstract: type="main">

We develop a search model to explain the long tail effect. Search targetability, or the quality of search, is explicitly modelled. Consumers are searching for the right products within the right categories. As search costs decrease, or search targetability increases, additional variety of goods catering to long tail consumers will be provided, and the concentration of sales across different categories of goods decreases. The effects of a decrease in search costs or an increase in search targetability on consumer utility, prices, and profits depend on whether the type coverage increases. Decreases in search costs and increases in search targetability have different qualitative effects.

Date: 2013
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