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Pricing in position auctions and online advertising

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  • M. Yenmez

Abstract

Can search engines increase revenues by changing their position auctions? In this paper, I analyze position auctions with general pricing rules to answer this question. In these auctions, there are several items that are commonly ranked by bidders with unit demand. I show that revenues remain the same for position auctions with regular pricing rules where the price for an item depends on the bids of agents who win lower-ranked items. In addition, all of the bidders have the same ex post payoffs. I also show that regularity is a necessary condition to get ex post payoff equivalence. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • M. Yenmez, 2014. "Pricing in position auctions and online advertising," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(1), pages 243-256, January.
    • Handle: RePEc:spr:joecth:v:55:y:2014:i:1:p:243-256
    DOI: 10.1007/s00199-013-0748-0
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    Cited by:

    1. Patrick Hummel, 2018. "Hybrid mechanisms for Vickrey–Clarke–Groves and generalized second-price bids," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(1), pages 331-350, March.
    2. Youngwoo Koh, 2013. "Keyword auctions with budget-constrained bidders," Review of Economic Design, Springer;Society for Economic Design, vol. 17(4), pages 307-321, December.
    3. Duan, Yongrui & Liu, Peng & Feng, Yixuan, 2022. "Pricing strategies of two-sided platforms considering privacy concerns," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    4. Hummel, Patrick, 2016. "Position auctions with dynamic resizing," International Journal of Industrial Organization, Elsevier, vol. 45(C), pages 38-46.
    5. Alison Watts, 2018. "Generalized Second Price Auctions over a Network," Games, MDPI, vol. 9(3), pages 1-11, September.
    6. Estrella Alonso & Joaquín Sánchez-Soriano & Juan Tejada, 2020. "Mixed Mechanisms for Auctioning Ranked Items," Mathematics, MDPI, vol. 8(12), pages 1-26, December.
    7. Yan, Haomin, 2021. "Position auctions with multi-unit demands," Games and Economic Behavior, Elsevier, vol. 127(C), pages 179-193.

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    More about this item

    Keywords

    Position auctions; Online advertising; Multidimensional types; Ex post payoff equivalence; C71; C78;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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