Mathematical Modeling of Competition in Sponsored Search Market

13 years 6 months ago
Mathematical Modeling of Competition in Sponsored Search Market
Sponsored search mechanisms have drawn much attention from both academic community and industry in recent years since the seminal papers of [3] and [4]. However, most of the existing literature concentrates on the mechanism design and analysis within the scope of only one search engine in the market. In this paper we propose a mathematical framework for modeling the interaction of publishers, advertisers and end users in a competitive market. We study the competition between two search engines as a three-stage dynamic game and prove the existence of Nash equilibrium prices when allowing advertisers to participate in both advertising systems simultaneously. To compare the expected revenues and social welfare under competition and monopoly, we carry out extensive simulation under common parameter setting of participants. Our results can provide useful insight in regulating the sponsored search market and protecting the interests of advertisers and end users.
Jian Liu, Dah Ming Chiu
Added 25 Dec 2010
Updated 25 Dec 2010
Type Journal
Year 2010
Where CORR
Authors Jian Liu, Dah Ming Chiu
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