Marketing Agencies and Collusive Bidding in Online Ad Auctions

Francesco Decarolis, Maris Goldmanis and Antonio Penta ()

No 23962, NBER Working Papers from National Bureau of Economic Research, Inc

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 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.

JEL-codes: C72 D44 D47 L81 M37 (search for similar items in EconPapers)
Date: 2017-10
New Economics Papers: this item is included in nep-com, nep-cul, nep-des, nep-gth, nep-ict, nep-mic, nep-mkt and nep-pay
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published as Francesco Decarolis & Maris Goldmanis & Antonio Penta, 2020. "Marketing Agencies and Collusive Bidding in Online Ad Auctions," Management Science, vol 66(10), pages 4433-4454.

Downloads: (external link)
http://www.nber.org/papers/w23962.pdf (application/pdf)

Related works:
Journal Article: Marketing Agencies and Collusive Bidding in Online Ad Auctions (2020)
Working Paper: Marketing Agencies and Collusive Bidding in Online Ad Auctions (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:23962

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w23962

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().