a b s t r a c tSponsored links on search engines are an emerging advertising tool, whereby a number of slots are put on sale through keyword auctions. This is also known as contextual advertising. Slot assignment and pricing in keyword auctions are then essential for the search engine's management since provide the main stream of revenues, and are typically accomplished by the Generalized Second Price (GSP) mechanism. In GSP the price of slots is a monotone function of the slot location, being larger for the highest slots. Though a higher location is associated with larger revenues, the lower costs associated with the lowest slots may make them more attractive for the advertiser. The contribution of this research is to show, by analytical and simulation results based on the theory of order statistics, that advertisers may not get the optimal slot they aim at (the slot maximizing their expected profit) and that the GSP mechanism may be unfair to all the winning bidders but the one who submitted the lowest bid.

No abstract

No abstract

No abstract

The impact of wholesale prices is examined in a context where the end customer access both free content and payper-use content, delivered by two different providers through a common network provider. We formulate and solve the game between the network provider and the pay-per-use content provider, where both use the price they separately charge the end customer with as a leverage to maximize their profits. In the neutral case (the network provider charges equal wholesale prices to the two content providers), the benefits coming from wholesale price reductions are largely retained by the pay-peruse content provider. When the free content provider is charged more than its pay-per-use competitor, both the network provider and the pay-per-use content provider see their profit increase, while the end customer experiences a negligible reduction in the retail price.