Position Auctions with Consumer Search

Susan Athey, Glenn Ellison

NBER Working Paper No. 15253
Issued in August 2009
NBER Program(s):   IO

This paper examines a model in which advertisers bid for "sponsored-link" positions on a search engine. The value advertisers derive from each position is endogenized as coming from sales to a population of consumers who make rational inferences about firm qualities and search optimally. Consumer search strategies, equilibrium bidding, and the welfare benefits of position auctions are analyzed. Implications for reserve prices and a number of other auction design questions are discussed.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w15253

Published: Susan Athey & Glenn Ellison, 2011. "Position Auctions with Consumer Search," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1213-1270. citation courtesy of

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