Pricing in Position Auctions and Online Advertising

13 Pages Posted: 6 Feb 2009 Last revised: 9 Jun 2012

Date Written: October 18, 2010

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 also have the same ex post payo ffs. 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

Suggested Citation

Yenmez, M. Bumin, Pricing in Position Auctions and Online Advertising (October 18, 2010). Available at SSRN: https://ssrn.com/abstract=1338656 or http://dx.doi.org/10.2139/ssrn.1338656

M. Bumin Yenmez (Contact Author)

Boston College ( email )

140 Commonwealth Ave.
Maloney Hall 327
Chestnut Hill, MA 02467
United States

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