Comparative Advantage and Efficient Advertising in the Attention Economy
15 Pages Posted: 31 May 2007
Date Written: January 9, 2007
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.
Keywords: attention economy, advertising, comparative advantage
JEL Classification: D50, D80, L10
Suggested Citation: Suggested Citation
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