Essays on Network Economics
Date Issued
2015
Date
2015
Author(s)
Shen, Hsiang-Ling
Abstract
This thesis consists of two very different but important issues on network economics: one in sponsored search auctions, and the other in telecommunication market. Consumers, like advertisers, may multi-home, but few studies have discussed this particular consumer behavior. Hence, in chapter one, I modify the click-through rate into three parts (the bidder-specific part, the slot-specific part and extit{the adjustment part} for the existence of multi-homing consumers) and set up a complete information model in sponsored search auctions with two search engines to derive the bidders'' equilibrium bidding strategies and all the agents'' equilibrium profits when they face multi-homing consumers. Under the mechanism of generalized second-price click-weighted auctions , I, applying Nash equilibrium, find that the winning bidders (those who have the higher quality scores) always multi-home (bid on both search engines) and their allocation is assortative. By utilizing the adjusted CTRs mentioned in this paper, all bidders can bid as if there is no multi-homing consumers which simplifies finding equilibrium under the situation when bidders bid on more than one search engine. In chapter two, I introduce the real transmitting process in telecommunication market and then set up a model to discuss the equilibrium under three different kinds of cost differences. The first is different social costs between making an on-net call and making an off-net call, the second is different switch costs (because of different fiber networks), and the third is different originating or terminating costs (since different network operators owns different frequency channel). When operators'' cost structures are the same, the equilibrium access charge is equal to the cost-based access charge. However, when operators'' cost structures are not the same (cost difference in switch cost and cost difference in originating or terminating cost), the equilibrium access charge is higher than the lower terminating cost. Only when there is cost differences between making an on-net call and making an off-net call, the equilibrium price ratio is higher than the mark up ratio. In other cases, the equilibrium price ratio is the same as its corresponding mark up ratio.
Subjects
multi-home
keyword auction
sponsored-search auction
click-through rate
air-time charge
access charge
termination charge
SDGs
Type
thesis
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