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Comparative Advante and Efficient Advertising in the Attention Economy

Author

Listed:
  • Huberman, Bernardo
  • Wu, Fang

Abstract

We analyze the problem that enterprises face when having to decide on the most effective way to advertise several items belonging to their inventories within the company’s webpages. We show that the ability to arbitrarily partition a website among items leads to a comparative advantage among webpages which can be exploited so as to maximize the total utility of the enterprise. This result, which also applies to the case of several competitive providers, is then extended to dynamical scenarios where both the advertising allocation and the exposure levels vary with time.

Suggested Citation

  • Huberman, Bernardo & Wu, Fang, 2006. "Comparative Advante and Efficient Advertising in the Attention Economy," MPRA Paper 928, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:928
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    File URL: https://mpra.ub.uni-muenchen.de/928/1/MPRA_paper_928.pdf
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    References listed on IDEAS

    as
    1. Falkinger, Josef, 2007. "Attention economies," Journal of Economic Theory, Elsevier, vol. 133(1), pages 266-294, March.
    2. Arjo Klamer & Hendrik van Dalen, 2001. "Attention and the art of scientific publishing," Journal of Economic Methodology, Taylor & Francis Journals, vol. 9(3), pages 289-315.
    3. Sattinger, Michael, 1978. "Comparative Advantage in Individuals," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 259-267, May.
    4. Gustav Feichtinger & Richard F. Hartl & Suresh P. Sethi, 1994. "Dynamic Optimal Control Models in Advertising: Recent Developments," Management Science, INFORMS, vol. 40(2), pages 195-226, February.
    5. Gabaix, Xavier & Laibson, David Isaac & Moloche, Guillermo & Stephen, Weinberg, 2003. "The allocation of attention: theory and evidence," MPRA Paper 47339, University Library of Munich, Germany.
    6. Sherwin Rosen, 2005. "Substitution And Division Of Labour," World Scientific Book Chapters,in: An Inframarginal Approach To Trade Theory, chapter 3, pages 29-51 World Scientific Publishing Co. Pte. Ltd..
    7. Falkinger, Josef, 2005. "Limited Attention as the Scarce Resource in an Information-Rich Economy," IZA Discussion Papers 1538, Institute for the Study of Labor (IZA).
    8. David M. Levy, 1988. "The Market for Fame and Fortune," History of Political Economy, Duke University Press, vol. 20(4), pages 615-625, Winter.
    9. V. Srinivasan, 1976. "Decomposition of a Multi-Period Media Scheduling Model in Terms of Single Period Equivalents," Management Science, INFORMS, vol. 23(4), pages 349-360, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    attention economy; comparative advantage; advertising;

    JEL classification:

    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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