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Bid coordination in sponsored search auctions: detection methodology and empirical analysis

Author

Listed:
  • Francesco Decarolis

    (Bocconi University [Milan, Italy])

  • Maris Goldmanis

    (RHUL - Royal Holloway [University of London])

  • Antonio Penta

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Barcelona School of Economics, UPF - Universitat Pompeu Fabra [Barcelona])

  • Ksenia Shakhgildyan

    (Bocconi University [Milan, Italy])

Abstract

Bid delegation to specialized intermediaries is common in internet ad auctions. When the same intermediary bids for competing advertisers, its incentive to coordinate client bids might alter the functioning of the auctions. This study develops a methodology to detect bid coordination and presents a strategy to estimate a bound on the search engine revenue losses imposed by bid coordination. When the method is applied to data from auctions held on a major search engine, coordination is detected in 55% of the cases of delegated bidding and the search engine's revenue loss ranges between 5.3% and 10.4%.

Suggested Citation

  • Francesco Decarolis & Maris Goldmanis & Antonio Penta & Ksenia Shakhgildyan, 2023. "Bid coordination in sponsored search auctions: detection methodology and empirical analysis," Post-Print hal-04198736, HAL.
    • Handle: RePEc:hal:journl:hal-04198736
    DOI: 10.1111/joie.12331
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    References listed on IDEAS

    as
    1. Francesco Decarolis & Gabriele Rovigatti, 2021. "From Mad Men to Maths Men: Concentration and Buyer Power in Online Advertising," American Economic Review, American Economic Association, vol. 111(10), pages 3299-3327, October.
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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