Marketing Agencies and Collusive Bidding in Online Ad Auctions

Decarolis, Francesco, Goldmanis, Maris and Penta, Antonio (2019) Marketing Agencies and Collusive Bidding in Online Ad Auctions. TSE Working Paper, n. 19-1011, Toulouse

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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 and Microsoft-Bing and Yahoo!) and the of VCG mechanism (used by Facebook). We find that, despite its well-known susceptibility to collusion, the VCG mechanism outperforms the GSP auction both in terms of revenues and efficiency.

Item Type: Monograph (Working Paper)
Language: English
Date: April 2019
Place of Publication: Toulouse
Uncontrolled Keywords: Collusion, Digital Marketing Agencies, Facebook, Google, GSP, Internet Auctions, Online Advertising, VCG.
JEL codes: C72 - Noncooperative Games
D44 - Auctions
L81 - Retail and Wholesale Trade; Warehousing; e-Commerce
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 02 May 2019 12:38
Last Modified: 28 Jun 2019 14:41
OAI ID: oai:tse-fr.eu:122943
URI: http://publications.ut-capitole.fr/id/eprint/32433

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