Common Agency and Coordinated Bids in Sponsored Search Auctions
AbstractAs auctions are becoming the main mechanism for selling advertisement space on the web, marketing agencies specialized in bidding in online auctions are proliferating. We analyze theoretically how bidding delegation to a common marketing agency can undermine both revenues and efficiency of the generalized second price auction, the format used by Google and Microsoft-Yahoo!. Our characterization allows us to quantify the revenue losses relative to both the case of full competition and the case of agency bidding under an alternative auction format (specifically, the VCG mechanism). We propose a simple algorithm that a search engine can use to reduce efficiency and revenue losses.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 13-19.
Length: 18 pages
Date of creation: Sep 2013
Date of revision:
Contact details of provider:
Web page: http://www.NETinst.org/
Online Advertising; Internet Auctions; Common Agency;
Other versions of this item:
- Maris Goldmanis & Antonio Penta & Francesco Decarolis, 2012. "Common Agency and Coordinated Bids in Sponsored Search Auctions," 2012 Meeting Papers 106, Society for Economic Dynamics.
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
- M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-05 (All new papers)
- NEP-COM-2013-10-05 (Industrial Competition)
- NEP-GTH-2013-10-05 (Game Theory)
- NEP-ICT-2013-10-05 (Information & Communication Technologies)
- NEP-MIC-2013-10-05 (Microeconomics)
- NEP-MKT-2013-10-05 (Marketing)
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.:
- Paul Klemperer, 2004.
"Auctions: Theory and Practice,"
Online economics textbooks,
SUNY-Oswego, Department of Economics, number auction1.
- Francesco Decarolis, 2009. "When the highest bidder loses the auction: theory and evidence from public procurement," Temi di discussione (Economic working papers) 717, Bank of Italy, Economic Research and International Relations Area.
- Decio Coviello & Mario Mariniello, 2010. "The Role of Publicity Requirements on Entry and Auctions Outcomes," CEIS Research Paper 180, Tor Vergata University, CEIS, revised 21 Dec 2010.
- Gian Luigi Albano & Milo Bianchi & Giancarlo Spagnolo, 2006.
"Bid Average Methods in Procurement,"
Rivista di Politica Economica,
SIPI Spa, vol. 96(1), pages 41-62, January-F.
- Rieko Ishii, 2007.
"Collusion in Repeated Procurement Auction: a Study of Paving Market in Japan,"
Discussion Papers in Economics and Business
07-16, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
- Rieko Ishii, 2008. "Collusion in Repeated Procurement Auction: A Study of a Paving Market in Japan," ISER Discussion Paper 0710, Institute of Social and Economic Research, Osaka University.
- Paul Klemperer, 2004.
"Introduction to Auctions: Theory and Practice
[Auctions: Theory and Practice]," Introductory Chapters, Princeton University Press.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nicholas Economides).
If references are entirely missing, you can add them using this form.