Economics at your fingertips  

Competition for Attention

Pedro Bordalo, Nicola Gennaioli and Andrei Shleifer

Working Paper from Harvard University OpenScholar

Abstract: We present a model of market competition in which consumers' attention is drawn to the products' most salient attributes. Firms compete for consumer attention via their choices of quality and price. Strategic positioning of a product affects how all other products are perceived. With this attention externality, depending on the cost of producing quality some markets exhibit ?commoditized? price salient equilibria, while others exhibit ?de-commoditized? quality salient equilibria. When the costs of quality change, innovation can lead to radical shifts in markets, as in the case of decommoditization of the coffee market by Starbucks. In the context of financial innovation, the model generates the phenomenon of ?reaching for yield?.

New Economics Papers: this item is included in nep-com, nep-ger, nep-ino, nep-mic and nep-mkt
References: Add references at CitEc
Citations: View citations in EconPapers (69)

Downloads: (external link)
Our link check indicates that this URL is bad, the error code is: 404 Not Found ( [301 Moved Permanently]--> [302 Moved Temporarily]--> [301 Moved Permanently]--> [301 Moved Permanently]--> [302 Found]-->

Related works:
Journal Article: Competition for Attention (2016) Downloads
Working Paper: Competition for Attention (2013) Downloads
Working Paper: Competition for Attention (2013) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Working Paper from Harvard University OpenScholar Contact information at EDIRC.
Bibliographic data for series maintained by Richard Brandon ( this e-mail address is bad, please contact ).

Page updated 2024-07-19
Handle: RePEc:qsh:wpaper:312541