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- Title
Marketing Agencies and Collusive Bidding in Online Ad Auctions.
- Authors
Decarolis, Francesco; Goldmanis, Maris; Penta, Antonio
- Abstract
The transition of the advertising market from traditional media to the internet has induced a proliferation of marketing agencies specialized in bidding in the auctions that are used to sell ad space on the web. We analyze how collusive bidding can emerge from bid delegation to a common marketing agency and how this can undermine the revenues and allocative efficiency of both the generalized second-price auction (GSP, used by Google, Microsoft Bing, and Yahoo!) and the Vickrey–Clarke–Groves (VCG) mechanism (used by Facebook). We find that despite its well-known susceptibility to collusion, the VCG mechanism outperforms the GSP auction in terms of both revenues and efficiency. This paper was accepted by Gabriel Weintraub, revenue management and market analytics.
- Subjects
INTERNET auctions; GOOGLE (Web resource); META Platforms Inc.; REVENUE management; MARKETING management; INTERNATIONAL economic integration; AUCTIONS
- Publication
Management Science, 2020, Vol 66, Issue 10, p4433
- ISSN
0025-1909
- Publication type
Article
- DOI
10.1287/mnsc.2019.3457