Category: genres

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Competing Ad Auctions

Ashlagi, Itai, Benjamin Edelman, and Hoan Soo Lee. “Competing Ad Auctions.” Harvard Business School Working Paper, No. 10-055, January 2010. (Revised May 2010, February 2011, September 2013.)

We present a two-stage model of competing ad auctions. Search engines attract users via Cournot-style competition. Meanwhile, each advertiser must pay a participation cost to use each ad platform, and advertiser entry strategies are derived using symmetric Bayes-Nash equilibrium that lead to the VCG outcome of the ad auctions. Consistent with our model of participation costs, we find empirical evidence that multi-homing advertisers are larger than single-homing advertisers. We then link our model to search engine market conditions: We derive comparative statics on consumer choice parameters, presenting relationships between market share, quality, and user welfare. We also analyze the prospect of joining auctions to mitigate participation costs, and we characterize when such joins do and do not increase welfare.

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Mobilizing an Online Business (teaching materials) with Peter Coles

Coles, Peter, and Benjamin Edelman. “Mobilizing an Online Business.” Harvard Business School Background Note 913-061, June 2013. (educator access at HBP. request a courtesy copy.)

Entrepreneurs starting online businesses often need to mobilize multiple sets of users or customers, each of whom hesitates to participate unless others join also. This case presents several challenges with similar structure.

Supplements:

Mobilizing an Online Business — slide supplement – PowerPoint Supplement (HBP 913702)

Mobilizing an Online Business — slide supplement (widescreen) – PowerPoint Supplement (HBP 914053)

Teaching Materials:

Mobilizing an Online Business – Teaching Note (HBP 913062)

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SaferTaxi: Connecting Taxis and Passengers in South America (teaching materials) with Peter Coles

Coles, Peter, and Benjamin Edelman. “SaferTaxi: Connecting Taxis and Passengers in South America.” Harvard Business School Case 913-041, April 2013. (Revised October 2014.) (educator access at HBP. request a courtesy copy.)

SaferTaxi, a taxi booking service in South America must develop its mobilization strategy; that is, it must attract enough passengers and drivers to make its service worthwhile for all. Drivers hesitate to pay for SaferTaxi’s smartphones and service unless these will deliver passenger bookings—and passengers have no reason to sign up unless drivers are available. Meanwhile, regulators question the permissibility of online taxi booking in light of regulatory requirements, and some existing taxi booking vendors feel threatened by SaferTaxi’s efforts to enter the market. As SaferTaxi attempts to satisfy these diverse constituents, international competition looms. What should SaferTaxi’s founders do next?

Teaching Materials:

SaferTaxi: Connecting Taxis and Passengers in South America – Teaching Note (HBP 913063)