Keywords, limited consideration, and organic product listings

Peter Landry ()
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Peter Landry: University of Toronto, Mississauga

Quantitative Marketing and Economics (QME), 2021, vol. 19, issue 3, No 8, 505-566

Abstract: Abstract This paper theoretically investigates the competitive effects of digital keyword search (DKS) in an organic (unsponsored) search market. In the model, sellers can decide which keyword(s) to include in their product listings—a common, but normally unmodeled real-world decision—while consumers only consider sellers whose listings are revealed by their searched keyword(s). The analysis focuses on two structural changes brought about by DKS, wider listing and wider querying, which refer (respectively) to the ways in which DKS makes it easier for sellers to index their listings to multiple keywords and for consumers to search multiple keywords. According to the analysis, wider listing can compel a seller to add a keyword to its product listing even when doing so reduces its overall ‘reach’; in these cases, wider listing allows sellers to increase profits, but simultaneously shrinks the market and reduces consumer surplus. In contexts where adding a keyword increases reach, however, wider listing expands the market and increases consumer surplus—though often at the expense of sellers’ profits. Wider querying may reinforce these effects, though “moderately wider” querying can compel sellers to revert to single-keyword listings. New implications regarding the effects of “auto-categorization” are also addressed.

Keywords: Theory; Keywords; Limited consideration; Product listings; Organic search (search for similar items in EconPapers)
JEL-codes: D21 D91 M31 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s11129-021-09240-3

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