Paid Placement: Advertising and Search on the Internet

@article{Chen2006PaidPA,
  title={Paid Placement: Advertising and Search on the Internet},
  author={Yongmin Chen and Chuan He},
  journal={Wiley-Blackwell: Economic Journal},
  year={2006}
}
Paid placement, where advertisers bid payments to a search engine to have their products appear next to keyword search results, has emerged as a predominant form of advertising on the Internet. This paper studies a product-di¤erentiation model where consumers are initially uncertain about the desirability of and valuation for di¤erent sellers? products, and can learn about a seller?s product through a costly search. In equilibrium, a seller bids more for placement when his product is more… 
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