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Pricing game of online display advertisement publishers

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  • Ahmed, Md. Tanveer
  • Kwon, Changhyun

Abstract

We consider online display advertisement publishers who maximize the revenue by optimal pricing in an oligopoly setting. Each publisher interacts with others through setting cost-per-impression (CPM) that affects the demand for everyone. Using the pseudoconcavity of the objective function, we prove that a unique best response Nash equilibrium exists for each publisher. We also consider the sensitivity of the publisher while other publishers changes their CPM. In both cases, the best response of the publisher depends entirely on her current best response CPM. We provide an algorithm for finding the equilibrium and illustrate by numerical examples.

Suggested Citation

  • Ahmed, Md. Tanveer & Kwon, Changhyun, 2012. "Pricing game of online display advertisement publishers," European Journal of Operational Research, Elsevier, vol. 219(2), pages 477-487.
    • Handle: RePEc:eee:ejores:v:219:y:2012:i:2:p:477-487
    DOI: 10.1016/j.ejor.2012.01.008
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    References listed on IDEAS

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    1. Jong-Shi Pang & Masao Fukushima, 2005. "Quasi-variational inequalities, generalized Nash equilibria, and multi-leader-follower games," Computational Management Science, Springer, vol. 2(1), pages 21-56, January.
    2. Jen-Chih Yao, 1994. "Variational Inequalities with Generalized Monotone Operators," Mathematics of Operations Research, INFORMS, vol. 19(3), pages 691-705, August.
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    Cited by:

    1. Heidrun Hoppe-Wewetzer & Christian Siemering, 2022. "Advertisement-financed credit ratings," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 46(1), pages 188-206, January.
    2. Zoltán SOMOSI, 2022. "The Role Of Artificial Intelligence In Content Creation And Checking Its Effectiveness In The Google Ads Advertising System," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 2(2), pages 259-270, December.
    3. Jiang, Guoyin & Tadikamalla, Pandu R. & Shang, Jennifer & Zhao, Ling, 2016. "Impacts of knowledge on online brand success: an agent-based model for online market share enhancement," European Journal of Operational Research, Elsevier, vol. 248(3), pages 1093-1103.
    4. Hoppe-Wewetzer, Heidrun C. & Siemering, Christian, 2020. "Advertisement-Financed Credit Ratings," CEPR Discussion Papers 14735, C.E.P.R. Discussion Papers.

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