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Paper #1782

Bid coordination in sponsored search auctions: Detection methodology and empirical analysis
Francesco Decarolis, Maris Goldmanis, Antonio Penta i Ksenia Shakhgildyan
Maig 2021
Bid delegation to specialized intermediaries is common in the auction systems used to sell internet advertising. When the same intermediary concentrates the demand for ad space from competing advertisers, its incentive to coordinate client bids might alter the functioning of the auctions. Using proprietary data from auctions held on a major search engine, this study develops a methodology to detect bid coordination. It also presents a strategy to estimate a bound on the search engine revenue losses imposed by coordination relative to a counterfactual benchmark of competitive bidding. In the data, coordination is detected in 55 percent of the cases of delegated bidding observed and the associated upper bound revenue loss for the search engine ranges between 5.3 and 10.4 percent.
Paraules clau:
online advertising, sponsored search auctions, delegation, common agency
Codis JEL:
C72, D44, L81
Àrea de Recerca:
Macroeconomia i Economia Internacional

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