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Economic Theory

, Volume 55, Issue 1, pp 243–256 | Cite as

Pricing in position auctions and online advertising

  • M. Bumin Yenmez
Research Article

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.

Keywords

Position auctions Online advertising Multidimensional types  Ex post payoff equivalence 

JEL Classification

C71 C78 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Carnegie Mellon UniversityPittsburghUSA

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