Price Competition and Endogenous Valuation in Search Advertising PDF Download
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Author: Lizhen Xu
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This paper studies how to endogenously assess the value of a ldquo;superiorrdquo; advertising position within the price competition and examines the resulting location competition outcomes and price dispersion patterns. We consider a game-theoretic model in which firms compete for advertising positions and then compete in price for customers in a product market. Firms differ in their competence, and positions are differentiated in their prominence, which reflects consumers' online search behavior. We find that when endogenously evaluated within the product market competition, a prominent advertising position might not always be desirable for a firm with competitive advantage, even if it is cost-free. The profitability of a prominent advertising position depends on the trade-off between the extra demand from winning the position and the higher equilibrium prices when the weaker competitor wins it. We also show that the bidding outcome might not align with the relative competitive strength, and an advantaged firm might not be able to win the prominent position even when it does value that position. We derive two-dimensional equilibrium price dispersion, with the realized prices at the same position varying and the expected prices differing across different positions. We find that the expected price in the prominent position might not always be higher, implying that an expensive location does not necessarily lead to expensive products.
Author: Lizhen Xu
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This paper studies how to endogenously assess the value of a ldquo;superiorrdquo; advertising position within the price competition and examines the resulting location competition outcomes and price dispersion patterns. We consider a game-theoretic model in which firms compete for advertising positions and then compete in price for customers in a product market. Firms differ in their competence, and positions are differentiated in their prominence, which reflects consumers' online search behavior. We find that when endogenously evaluated within the product market competition, a prominent advertising position might not always be desirable for a firm with competitive advantage, even if it is cost-free. The profitability of a prominent advertising position depends on the trade-off between the extra demand from winning the position and the higher equilibrium prices when the weaker competitor wins it. We also show that the bidding outcome might not align with the relative competitive strength, and an advantaged firm might not be able to win the prominent position even when it does value that position. We derive two-dimensional equilibrium price dispersion, with the realized prices at the same position varying and the expected prices differing across different positions. We find that the expected price in the prominent position might not always be higher, implying that an expensive location does not necessarily lead to expensive products.
Author: Lizhen Xu Ph. D.
Publisher:
ISBN:
Category :
Languages : en
Pages : 306
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Book Description
This dissertation performs economic analysis of search advertising from a comprehensive picture of the competition facing advertisers---by incorporating the price competition to endogenously investigate advertisers' bidding incentive, and taking into account consumers' online search and the unique information structure associated with the search advertising format. It consists of three essays based on game-theoretic modeling. The first essay studies the oligopolistic price competition among advertisers placed in different advertising positions, considering distinctive features of consumers' online search behaviors. We find an interesting local-competition pattern in which direct price competition occurs only between advertisers adjacent to each other. The second essay integrates the price competition into the bidding competition and investigates the endogenous bidding incentives of advertisers with different competitive strengths. Surprisingly, we find that an advertising position with a better exposure may not always be profitable for the advertisers with competitive advantage, even if it is cost free. We also show that the bidding outcome might not align with the relative competitive strength. The third essay further considers the effects of organic listing as a competing information source on the sponsored bidding competition and the outcome performances in search advertising. It provides answers to questions such as whether and why advertisers with sufficient exposure from the organic list may still be willing to bid for top sponsored positions, and how the existence of organic listing affects search engine's revenue, consumer surplus, and social welfare.
Author: Simon P. Anderson
Publisher: Elsevier
ISBN: 0444627243
Category : Business & Economics
Languages : en
Pages : 563
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Book Description
Handbook of Media Economics provides valuable information on a unique field that has its own theories, evidence, and policies. Understanding the media is important for society, and while new technologies are altering the media, they are also affecting our understanding of their economics. The book spans the large scope of media economics, simultaneously offering in-depth analysis of particular topics, including the economics of why media are important, how media work (including financing sources, institutional settings, and regulation), what determines media content (including media bias), and the effects of new technologies. The book provides a powerful introduction for those interested in starting research in media economics. Helps academic and non-academic economists understand recent rapid changes in theoretical and empirical advances, in structural empirical methods, and in the media industry's connection with the democratic process Presents the only detailed summary of media economics that emphasizes political economy, merger policy, and competition policy Pays special attention to the economic influences of the Internet, including developments in social media, user-generated content, and advertising, as well as the Internet's effects on newspapers, radio, and television
Author: Paul Belleflamme
Publisher: Cambridge University Press
ISBN: 1108482570
Category : Business & Economics
Languages : en
Pages : 275
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Book Description
The first book on platforms that concisely incorporates path-breaking insights in economics over the last twenty years.
Author: Song Yao
Publisher: Now Publishers Inc
ISBN: 1601982283
Category : Brand loyalty
Languages : en
Pages : 66
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Book Description
Sponsored Search Auctions reviews current academic research on this nascent topic with a focus on future practical and research opportunities
Author: Jonna Järveläinen
Publisher: Springer
ISBN: 3642398081
Category : Computers
Languages : en
Pages : 178
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Book Description
This book constitutes the refereed proceedings of the 15th International Conference on Electronic Commerce, ICEC 2013, held in Turku, Finland, in August 2013. The theme of ICEC 2013 was "effective, agile, and trusted e-services co-creation” and reflects the alignment between computerized, formalized business procedures with the need to flexibly adapt and innovate businesses on the spot according to changing customer needs and requirements. The 13 papers published in this book were carefully reviewed and selected from more than 50 submissions, resulting in an acceptance rate of less than 25%. They are organized in topical sections on online advertisements and referential systems, recommender systems and pricing, social media, mobile services, business models, and societal implications.
Author: Francisco J. Martínez-López
Publisher: Springer Science & Business Media
ISBN: 3642397476
Category : Business & Economics
Languages : en
Pages : 1004
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Book Description
This research handbook provides a comprehensive, integrative, and authoritative resource on the main strategic management issues for companies within the e-business context. It covers an extensive set of topics, dealing with the major issues which articulate the e-business framework from a business perspective. The handbook is divided into the following e-business related parts: background; evolved strategic framework for the management of companies; key business processes, areas and activities; and, finally, emerging issues, trends and opportunities, with special attention to diverse Social Web-related implications. The articles are varied, timely and present high-quality research; many of these unique contributions will be especially valued and influential for business scholars and professionals interested in e-business. Many of the contributors are outstanding business scholars who are or have been editors-in-chief of top-ranked management and business journals or have made significant contributions to the development of their respective fields.
Author: Silva Deželan
Publisher: Rozenberg Publishers
ISBN: 9051708289
Category :
Languages : en
Pages : 157
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Book Description
Information is crucial to make good decisions, but obtaining and providing information often comes at a cost. Consumers and firms both need to balance these costs and benefits of obtaining and providing information in order to make the best decisions. The research in this thesis investigates several questions that pertain to the acquisition and provision of information. In the first part of this thesis it is assumed that consumers are not fully informed about the prices or availability of a product they want to buy. Consumers can search for information, but this comes at a cost. At the same time, shops can influence these costs. In the first two studies in this part, shops have the possibility to advertise. An advertisement provides information to consumers and reduces the search costs. We investigate, among other things, the pricing behavior of shops and the relation between search and advertising. The third study in this part of the thesis considers the location choice of shops. Locating together in a shopping mall reduces the search costs of consumers. This increases the competition between shops and lowers the prices, but we show that at the same time the sales volume increases. The total effect of locating together on profits is generally positive. The second part of this thesis considers director ties (also named interlocks). A director who has several directorships in different firms can serve as an information bridge between the different firms. At the same time, interlocking directors are busy and form a homogenous group. Data from the Netherlands show that in The Netherlands the positive information providing effect of interlocks is outweighed by a negative busyness and homogenous group effect.
Author: Richard Louis Urso
Publisher:
ISBN:
Category : Advertising
Languages : en
Pages : 288
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Book Description
Author: Kinshuk Jerath
Publisher:
ISBN:
Category :
Languages : en
Pages : 41
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Book Description
As sponsored search becomes increasingly important as an advertising medium for firms, search engines are exploring more advanced bidding and ranking mechanisms to increase their revenue from auctions for sponsored search advertising. For instance, Google, Yahoo! and Bing are experimenting with auction mechanisms in which each advertiser can bid to be displayed exclusively. In such an auction, each advertiser submits two bids: one bid for the standard display format in which multiple advertisers are displayed, and one bid for being shown exclusively. The search engine decides the outcome as non-exclusive or exclusive based on revenue generated -- if the exclusive-placement bid by an advertiser is high enough then only that advertiser is displayed, otherwise multiple advertisers are displayed and ranked based on their multiple-placement bids. We find that allowing advertisers to bid for exclusivity has two countervailing effects for search engine revenue. First, competition is heightened because bidders can express their display preferences more flexibly and compete not only for positions in the non-exclusive outcome but also compete for the outcome to be exclusive or non-exclusive; this is good for search engine revenue. Second, competition between non-exclusive and exclusive outcomes gives bidders the incentive to reduce their bids for their non- preferred outcome; this is bad for search engine revenue. Under different parametric conditions, either force can prevail and search engine revenue may increase or decrease accordingly. We also find counterintuitive results on the bidding strategies of advertisers; for instance, we find that, under certain conditions, advertisers have the incentive to bid above their true valuations.
