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The B.E. Journal of Theoretical Economics

Editor-in-Chief: Schipper, Burkhard

Ed. by Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Wenzelburger, Jan

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Optimal Quality Scores in Sponsored Search Auctions: Full Extraction of Advertisers' Surplus

Kiho Yoon
Published Online: 2010-07-02 | DOI: https://doi.org/10.2202/1935-1704.1649

This paper shows that the quality scores in sponsored search auctions can be optimally chosen to extract all the advertisers' surplus. The reason for the full extraction result is that the quality scores may effectively set all the bidders' valuations equal to the highest valuation, which induces intense bidding competition.

Keywords: online advertising; sponsored search; quality score; full extraction

About the article

Published Online: 2010-07-02

Citation Information: The B.E. Journal of Theoretical Economics, Volume 10, Issue 1, ISSN (Online) 1935-1704, DOI: https://doi.org/10.2202/1935-1704.1649.

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