Pricing in Position Auctions and Online Advertising
13 Pages Posted: 6 Feb 2009 Last revised: 9 Jun 2012
Date Written: October 18, 2010
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 also have the same ex post payoffs. I also show that regularity is a necessary condition to get ex post payoff equivalence.
Keywords: Position Auctions, Online Advertising, Ascending Auctions
JEL Classification: D44, L81, M37
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