A dynamic model of bidding patterns in sponsored search auctions

Kursad Asdemir

doi:10.1007/s10799-010-0077-y

A dynamic model of bidding patterns in sponsored search auctions

Kursad Asdemir

Research output: Contribution to journal › Article › peer-review

6 Citations (Scopus)

Abstract

We develop an infinite horizon alternative-move model of the unique second-price sponsored search auction. We use this model to explain two distinguishable bidding patterns observed in our bidding data: bidding war cycle and stable bid. With examples, we show that only a small portion of the value generated may be extracted by search engines, if advertisers are engaged in bidding war cycles. Finally, we show the impact of auction design on advertiser bids and search engine revenue.

Original language	English
Pages (from-to)	1-16
Number of pages	16
Journal	Information Technology and Management
Volume	12
Issue number	1
DOIs	https://doi.org/10.1007/s10799-010-0077-y
Publication status	Published - Mar 2011
Externally published	Yes

Keywords

Dynamic oligopoly
E-commerce
Sponsored search auction
Tacit collusion

ASJC Scopus subject areas

Information Systems
Communication
Business, Management and Accounting (miscellaneous)

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10.1007/s10799-010-0077-y

Cite this

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AB - We develop an infinite horizon alternative-move model of the unique second-price sponsored search auction. We use this model to explain two distinguishable bidding patterns observed in our bidding data: bidding war cycle and stable bid. With examples, we show that only a small portion of the value generated may be extracted by search engines, if advertisers are engaged in bidding war cycles. Finally, we show the impact of auction design on advertiser bids and search engine revenue.

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KW - Tacit collusion

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A dynamic model of bidding patterns in sponsored search auctions

Abstract

Keywords

ASJC Scopus subject areas

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