Too Organic For Organic Listing? Interplay Between Organic And Sponsored Listing In Search Advertising

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Executive Summary

This paper aims to answer three major questions related to the unexplored role of organic listing in online search advertising: (1) Should advertisers who are already placed at top slots in the organic list bid actively for sponsored positions? (2) Does organic listing benefit or harm search engine revenue, social welfare, and overall sales diversity? (3) How can organic ranking be improved? Firms are asymmetrically differentiated in terms of market preference and are placed at different organic slots with different prominence based on their relative popularity.

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