Competition between demand-side intermediaries in ad exchanges

Online advertising constitutes one of the main sources of revenue for the majority of businesses on the web. Online advertising inventory was traditionally traded via bilateral contracts between publishers and advertisers, vastly through a number of intermediaries. However, what caused an explosion in the volume and, consequently, the revenue of online ads was the incorporation of auctions as the major mechanism for trading sponsored search ads in all major search engines. This reduced transaction costs and allowed for the advertisement of small websites which constitute the majority of Internet traffic. Auction-based markets were harder to establish in the display advertising industry due to the higher volume of inventory and the pre-existence of traditional intermediaries, often leading to inefficiencies and lack of transparency. Nevertheless, this has recently changed with the introduction of the ad exchanges, centralized marketplaces for the allocation of display advertising inventory that support auctions and real-time bidding. The appearance of ad exchanges has also altered the market structure of both demand-side and supply side intermediaries which increasingly adopt auctions to perform their business operations. Hence, each time a user enters a publisher's website, the contracted ad exchange runs an auction among a number of demand-side intermediaries, each of which represents their interested advertisers and typically submits a bid by running a local auction among these advertisers.Against this background, within this thesis, we look both at the auction design problem of the ad exchange and the demand-side intermediaries as well as at the strategies to be adopted by advertisers. Specifically, we study the revenue and efficiency effects of the introduction and competition of the demand-side intermediaries in a single-item auction setting with independent private valuations. The introduction of these intermediaries constitutes a major issue for ad exchanges since they hide some of the demand from the ad exchange and hence can make a profit by pocketing the difference between what they receive from their advertisers and what they pay at the exchange. Ad exchanges were created to offer transparency to both sides of the market, so it is important to study the share of the revenue that intermediaries receive to justify their services offered given the competition they face by other such intermediaries. The existence of mediators is a well-known problem in other settings. For this reason, our formulation is general enough to encompass other areas where two levels of auctions arise, such as procurement auctions with subcontracting and auctions with colluding bidders.In more detail, we study the effects of the demand-side intermediaries' choice of auction for three widely used mechanisms, two variations of the second-price sealed-bid (known as Vickrey) auction, termed PRE and POST, and first-price sealed-bid (FPSB) auctions. We first look at a scenario with a finite number of intermediaries, each implementing the same mechanism, where we compare the profits attained for all stakeholders. We find that there cannot be a complete profit ranking of the three auctions: FPSB auctions yield higher expected profit for a small number of competing intermediaries, otherwise PRE auctions are better for the intermediaries. We also find that the ad exchange benefits from intermediaries implementing POST auctions. We then let demand-side intermediaries set reserve (or floor) prices, that are known to increase an auctioneer's expected revenue. For issues of analytical tractability, we only consider scenarios with two intermediaries but we also compare the two Vickrey variations in heterogeneous settings where one intermediary implements the first whereas the other implements the second variation. We find that intermediaries, in general, follow mixed reserve-price-setting strategies whose distributions are difficult to derive analytically. For this reason, we use the fictitious play algorithm to calculate approximate equilibria and numerically compare the revenue and efficiency of the three mechanisms for specific instances. We find that PRE seems to perform best in terms of attained profit but is less efficient than POST. Hence, the latter might be a better option for intermediaries in the long term.Finally, we extend the previous setting by letting advertisers strategically select one of the two intermediaries when the latter implement each of the two Vickrey variations. We analytically derive the advertisers' intermediary selection strategies in equilibrium. Given that, in some cases, these strategies are rather complex, we use again the fictitious play algorithm to numerically calculate the intermediaries' and the ad exchange's best responses for the same instances as before. We find that, when both intermediaries implement POST auctions, advertisers always select the low-reserve intermediary, otherwise they generally follow randomized strategies. Last, we find that the ad exchange benefits from intermediaries implementing the pre-award Vickrey variation compared to a setting with two heterogeneous Vickrey intermediary auctioneers, whereas the opposite is true for the intermediaries.<br/

Expansion Strategy of Burda Auction, s.r.o. into Germany

Diplomová práce analyzuje možnosti vstupu Burda Auction, s.r.o. na filatelistický trh Spolkové republiky Německo. Obsahuje zhodnocení teoretických poznatků a používaných analytických metod, které jsou poté aplikovány při analýze německého trhu s filatelií a konkurenčního prostředí. A poté navrhuje vhodné strategie pro expanzi firmy Burda Auction, s.r.o. na německý trh.The thesis analyses the possibility of expansion of Burda Auction, s.r.o. into German market with philately. It includes analytical methods and theoretical knowledge which is then used for analysis of German market with philately and analysis of competition environment. Then it proposes suitable expansion strategies for the entry of Burda Auction, s.r.o. into the German market.

FIDE Congress 2020 - EU Competition Law and the Digital Economy: United Kingdom Report

This report was prepared for the 29th biennial Congress of the International Federation of European Law (FIDE) to be held in The Hague in May 2020. It is the national report for the United Kingdom in response to Topic 3 of the 2020 FIDE Congress, titled ‘EU Competition Law and the Digital Economy’. This report offers an overview of UK competition enforcement in digital economy markets by answering twelve questions organised into four sections. Part A summarises key UK antitrust and merger decisions, agency publications, priorities and goals of enforcement in digital economy markets. Part B focuses upon the definition of markets and conceptualisation of market power by UK authorities in digital economy cases in light of their challenges and particularities. Part C offers a detailed overview of the issues underpinning UK antitrust and merger scrutiny in this field: the types of conduct investigated, relevant factors and concepts, theories of harm, efficiency justifications and remedies in digital economy cases. Finally, Part D identifies the potential for incoherent enforcement in this field from two different sources: the overlap between UK competition law and ex ante regulatory regimes (e.g. consumer protection, data protection); and the overlap between the powers of various UK competition decision-makers (e.g. sectoral regulators, the Competition Appeal Tribunal, and the courts)

B2B e-marketplaces : a study of the current industry

The subsequent work is a study of B2B e-marketplaces. These trading platforms are a relatively new creation, having their birth in the ever more widespread adoption of Internet technology throughout business. The implementation of electronic transactions in place of the traditional paper-based order process offers substantial cost reductions to companies. Once a company has decided on changing the procurement process to the electronic medium however it is presented with a multitude of technical incompatible problems to reach all of its trading partners, as there currently exists no technical standard for business transactions. Thus there is an opportunity for an intermediary, a platform where a myriad of companies can ‘virtually’ congregate to trade, this marketplace being accessed through an easy to use Web site. The e-marketplace may generate revenue in part by extracting a fee for each transaction conducted across its platform. This creates a dilemma, the creation of a trading platform is not such a feat that it is beyond large companies. Indeed the transaction fees charged by e-marketplaces compound the desire of companies to create their own platforms. Such private e-marketplaces are appearing, built on proprietary technologies and inciting concerns of fair-trading law infringements. The independent e-marketplace built to service an entire industry must offer more to potential users than a company could provide for itself. It achieves this through being neutral and open to all industry members, highly transparent in operation and explicit in its integrity. Impossible for company-created and therefore biased platforms, the independent platform can create a Virtual Community, supporting networking throughout an industry. Rather than monetary profits for the owners of the platform, the true value of the e-marketplace lies in the use of information to manage inventory, saving large amounts of money usually trapped in stock and in striking redesigns of workflow.The subsequent work is a study of B2B e-marketplaces. These trading platforms are a relatively new creation, having their birth in the ever more widespread adoption of Internet technology throughout business. The implementation of electronic transactions in place of the traditional paper-based order process offers substantial cost reductions to companies. Once a company has decided on changing the procurement process to the electronic medium however it is presented with a multitude of technical incompatible problems to reach all of its trading partners, as there currently exists no technical standard for business transactions. Thus there is an opportunity for an intermediary, a platform where a myriad of companies can ‘virtually’ congregate to trade, this marketplace being accessed through an easy to use Web site. The e-marketplace may generate revenue in part by extracting a fee for each transaction conducted across its platform. This creates a dilemma, the creation of a trading platform is not such a feat that it is beyond large companies. Indeed the transaction fees charged by e-marketplaces compound the desire of companies to create their own platforms. Such private e-marketplaces are appearing, built on proprietary technologies and inciting concerns of fair-trading law infringements. The independent e-marketplace built to service an entire industry must offer more to potential users than a company could provide for itself. It achieves this through being neutral and open to all industry members, highly transparent in operation and explicit in its integrity. Impossible for company-created and therefore biased platforms, the independent platform can create a Virtual Community, supporting networking throughout an industry. Rather than monetary profits for the owners of the platform, the true value of the e-marketplace lies in the use of information to manage inventory, saving large amounts of money usually trapped in stock and in striking redesigns of workflow

The Internet Direct Public Offering: Establishing Trust in a Disintermediated Capital Market

Whereas the process of financial intermediation was once human capital and relationship intensive, it is now heavily influenced by technological innovation and consumer demand, factors which have tended to disrupt the monopoly power of financial intermediaries. Technological innovation alone, however, is not sufficient to replace the institutions and actors that previously dominated the market for public offerings; rather, the concept of disintermediation by definition creates a vacuum that must be filled. Law firms and other intermediaries can create additional value for their clients by assuming some or all of the tasks currently apportioned to investment bankers in the public offering process. Theoretical models created within the field of behavioural economics are useful in guiding securities regulators, lawyers, and academics to a fuller understanding of the current limitations inhibiting the realization of a functioning disintermediated marketplace for securities. Ultimately, the argument calls for the creation of a market environment where the decreased cost component of a disintermediated offering is complemented by reputational elements that import legitimacy into the offering. As technology and the presence of other intermediaries have replicated or avoided many of the justifications for direct underwriter involvement in smaller public offerings, it remains to be considered whether such instruments and institutions are capable of nurturing and sustaining the trust-based attributes of traditional reputational intermediaries. Effective dis- intermediation in the securities markets will remain an elusive objective as long as the impediments to the development of trust remain in place. At a broader level, a responsible approach to the access to capital problem should reflect the belief that a properly functioning market is an instrument of social control capable of influencing broader social objectives (as opposed to being an institution with an insular focus responsive only to the needs of its participants). A more efficient capital market providing enhanced access for smaller issuers can contribute meaningfully to the economic welfare of the greater society. A coherent proposal for regulatory reform and institutional development must balance the competing objectives of offering enhanced access to capital for small businesses while not exacerbating the market risk posed to investors by such developments. A brief examination of the problem of informational asymmetry is followed by a look at the economic and regulatory costs imposed upon smaller issuers. This paper then turns to an examination of the ‘‘functional’’ inhibitors to growth posed by the role of traditional market intermediaries and reviews the concept of dis- intermediation, focusing on the promise of the Internet direct public offering as a means of achieving a functionally disintermediated securities market and the obstacles currently impeding the realization of that goal. Finally, this paper looks at the lack of trust as the ‘‘weakest link’’ in the disintermediation edifice, and proposes a work- able means for establishing trust in the disintermediated marketplace

Global Art Market in the Aftermath of COVID-19

Although the global art market has often been resilient to international economic and political events, it has recently faced some of its biggest challenges under the influence of COVID-19. Among others, the pandemic and the accompanying restrictive administrative measures taken by world governments have significantly influenced such key economic indicators as gallery employment, art sales, and the organization of international art fairs. The Special Issue "Global Art Market in the Aftermath of COVID-19" studies various economic, social, and political impacts of the COVID-19 pandemic on the global art market’s current state and future evolution

Incentive-driven QoS in peer-to-peer overlays

A well known problem in peer-to-peer overlays is that no single entity has control over the software, hardware and configuration of peers. Thus, each peer can selfishly adapt its behaviour to maximise its benefit from the overlay. This thesis is concerned with the modelling and design of incentive mechanisms for QoS-overlays: resource allocation protocols that provide strategic peers with participation incentives, while at the same time optimising the performance of the peer-to-peer distribution overlay. The contributions of this thesis are as follows. First, we present PledgeRoute, a novel contribution accounting system that can be used, along with a set of reciprocity policies, as an incentive mechanism to encourage peers to contribute resources even when users are not actively consuming overlay services. This mechanism uses a decentralised credit network, is resilient to sybil attacks, and allows peers to achieve time and space deferred contribution reciprocity. Then, we present a novel, QoS-aware resource allocation model based on Vickrey auctions that uses PledgeRoute as a substrate. It acts as an incentive mechanism by providing efficient overlay construction, while at the same time allocating increasing service quality to those peers that contribute more to the network. The model is then applied to lagsensitive chunk swarming, and some of its properties are explored for different peer delay distributions. When considering QoS overlays deployed over the best-effort Internet, the quality received by a client cannot be adjudicated completely to either its serving peer or the intervening network between them. By drawing parallels between this situation and well-known hidden action situations in microeconomics, we propose a novel scheme to ensure adherence to advertised QoS levels. We then apply it to delay-sensitive chunk distribution overlays and present the optimal contract payments required, along with a method for QoS contract enforcement through reciprocative strategies. We also present a probabilistic model for application-layer delay as a function of the prevailing network conditions. Finally, we address the incentives of managed overlays, and the prediction of their behaviour. We propose two novel models of multihoming managed overlay incentives in which overlays can freely allocate their traffic flows between different ISPs. One is obtained by optimising an overlay utility function with desired properties, while the other is designed for data-driven least-squares fitting of the cross elasticity of demand. This last model is then used to solve for ISP profit maximisation

A theoretical and computational basis for CATNETS

The main content of this report is the identification and definition of market mechanisms for Application Layer Networks (ALNs). On basis of the structured Market Engineering process, the work comprises the identification of requirements which adequate market mechanisms for ALNs have to fulfill. Subsequently, two mechanisms for each, the centralized and the decentralized case are described in this document. These build the theoretical foundation for the work within the following two years of the CATNETS project. --Grid Computing