Optimal quality scores in sponsored search auctions: Full extraction of advertisers' surplus
AbstractThis paper shows that the quality scores in sponsored search auctions can be optimally chosen to extract all the advertisers' surplus. The reason for the full extraction result is that the quality scores may effectively set all the bidders' valuations equal to the highest valuation, which induces intense bidding competition.
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Bibliographic InfoPaper provided by Institute of Economic Research, Korea University in its series Discussion Paper Series with number 0904.
Length: 19 pages
Date of creation: 2009
Date of revision:
Online advertising; Sponsored search; Quality score; Full extraction;
Other versions of this item:
- Yoon Kiho, 2010. "Optimal Quality Scores in Sponsored Search Auctions: Full Extraction of Advertisers' Surplus," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-11, July.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2007.
"Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords,"
American Economic Review,
American Economic Association, vol. 97(1), pages 242-259, March.
- Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2005. "Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords," NBER Working Papers 11765, National Bureau of Economic Research, Inc.
- David S. Evans, 2009. "The Online Advertising Industry: Economics, Evolution, and Privacy," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 37-60, Summer.
- Varian, Hal R., 2007. "Position auctions," International Journal of Industrial Organization, Elsevier, vol. 25(6), pages 1163-1178, December.
- Evans David S., 2008. "The Economics of the Online Advertising Industry," Review of Network Economics, De Gruyter, vol. 7(3), pages 1-33, September.
- Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, vol. 56(6), pages 1247-57, November.
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