Competition for attention in the information (overload) age
AbstractLimited consumer attention limits product market competition: prices are stochastically lower the more attention is paid. Ads compete to be the lowest price in a sector but compete for attention with ads from other sectors: equilibrium ad shares follow a CES form. When a sector gets more proÞtable, its advertising expands: others lose ad market share. The "information hump" shows highest ad levels for intermediate attention levels. The Information Age takes off when the number of viable sectors grows, but total ad volume reaches an upper limit. Overall, advertising is excessive, though the allocation across sectors is optimal.
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Bibliographic InfoPaper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00517721.
Date of creation: 2012
Date of revision:
Publication status: Published, RAND Journal of Economics, 2012, 43, 1, 1-25
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economics of attention; information age; price dispersion; advertising distribution; consumer attention; information Þltering; size distribution of Þrms; CES; information congestion.;
Other versions of this item:
- Simon P. Anderson & AndrÃ© de Palma, 2012. "Competition for attention in the Information (overload) Age," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 1-25, 03.
- Anderson, Simon P. & de Palma, André, 2009. "Competition for attention in the information (overload) age," CEPR Discussion Papers 7286, C.E.P.R. Discussion Papers.
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D60 - Microeconomics - - Welfare Economics - - - General
- I0 - Health, Education, and Welfare - - General
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-22 (All new papers)
- NEP-COM-2013-05-22 (Industrial Competition)
- NEP-MKT-2013-05-22 (Marketing)
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