Advertising for Attention

We model the idea that when consumers search for products, they first visit the firms which advertise more, or the firms whose advertising is more salient. Equilibrium prices and advertising efforts are increasing in consumer search costs. By contrast, equilibrium profits are nonmonotonic in search costs so firms are not necessarily better off if search costs rise. In our model, firms are engaged in a battle for consumer attention so advertising is purely wasteful. If advertising were banned, equilibrium prices would not be affected and firms would be better off. P R E L I M I N A R Y JEL Classification Numbers: D83, L13, M37.