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Listed author(s):
  • Alexandre de Cornière
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    Search engines enable advertisers to target consumers based on the query they have entered. In a framework in which consumers search sequentially after having entered a query, I show that such targeting reduces search costs, improves matches and intensifies price competition. However, a profit-maximizing monopolistic search engine imposes a distortion by charging too high an advertising fee, which may negate the benefits of targeting. The search engine also has incentives to provide a suboptimal quality of sponsored links. Competition among search engines can increase or decrease welfare, depending on the extent of multi-homing by advertisers.

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    File URL: https://www.aeaweb.org/articles?id=10.1257/mic.20130138
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    Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

    Volume (Year): 8 (2016)
    Issue (Month): 3 (August)
    Pages: 156-188

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    Handle: RePEc:aea:aejmic:v:8:y:2016:i:3:p:156-88
    Note: DOI: 10.1257/mic.20130138
    Contact details of provider: Web page: https://www.aeaweb.org/aej-micro
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