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SSRN Electronic Journal
Article . 2012 . Peer-reviewed
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Informative Advertising in Directed Search

Authors: Gomis-Porqueras, Pedro; Julien, Benoit; Chengsi, Wang;

Informative Advertising in Directed Search

Abstract

We consider a directed search environment where capacity constrained sellers reach uncoordinated buyers through costly advertising while buyers observed all prices probabilistically. We show that: (i) the equilibrium advertising intensity has an inverted U-shape in market tightness, (ii) the equilibrium advertising intensity is higher under an auction mechanism than under posted pricing, and (iii) the equilibrium price and measure of informed buyers may {be positively correlated} even in large markets.

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Keywords

costly advertising, directed search, imperfect observability, sales mechanism, costly advertising, directed search, imperfect observability, sales mechanism., jel: jel:M37, jel: jel:D83, jel: jel:E52, jel: jel:E63, jel: jel:J64

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
bronze