On the optimal number of advertising slots in a generalized second-price auction

In search advertising, a search engine uses a generalized second-price auction to sell advertising slots adjacent to search results on its webpage. In this paper, we study an interesting question related to the design of the generalized second-price auction: how should a search engine strategically decide on the number of advertising slots? To answer this question, we analyze the implication of varying the number of slots in a base model in which the click-through rates are assumed to be independent of the number of slots. When deciding the number of slots, we find that a search engine’s profit is based on two counteracting factors: the incremental clicks from an extra slot and the influence of the extra slot on advertisers’ payments per click. Our analysis characterizes the conditions for optimality of the number of slots and the implications of different distributions for advertiser valuations. We also extend the base model to allow for attraction and cannibalization of clicks from existing slots by new ad slots and show how such effects affect the optimal number of slots. Our overall results show that search engines need to optimize the number of ad slots offered for auction in order to maximize profit.     

The Liquidity Discount

This paper characterizes the liquidity discount, the difference between the market value of a trader's position and its value when liquidated. This discount occurs whenever traders face downward sloping demand curves for shares and execution lags in selling shares. This characterization enables one to modify the standard value at risk (VaR) computation to include liquidity risk.     

The Disappearing Delaware Effect

Refining and extending the methodology introduced by Daines(2001), I present evidence that small Delaware firms were worthmore than small non-Delaware firms during the period 1991–1996but not afterwards. I also present evidence that larger firms,which comprise 98% of my sample by size, exhibit no Delawareeffect for any year during the period 1991–2002. Thusthe Delaware effect "disappears" when examined over time andwhen examined for firms that are economically meaningful. Thesenew contours of the Delaware effect suggest that the benefitassociated with Delaware incorporation was an order of magnitudesmaller than estimated by Daines (2001) during the early 1990s,and nonexistent by the late 1990s. The trajectory of the Delawareeffect further suggests that it cannot provide support for the"race to the top" view of regulatory competition, as some commentatorshave argued, and may in fact provide support for the "race tothe bottom" view. Finally, the findings presented here identifytwo puzzles: (1) Why did small Delaware firms exhibit a positiveDelaware effect during the early 1990s but larger firms didnot? (2) Why did this effect disappear in the late 1990s? Iidentify doctrinal changes in Delaware corporate law in themid-1990s, increased managerial incentives to sell during thisperiod, and a cohort selection effect during the 1980s as potentialexplanations.     

AGRICULTURAL EXPORTS OF DEVELOPING COUNTRIES: ESTIMATES OF INCOME AND PRICE ELASTICITIES OF DEMAND AND SUPPLY

This paper provides new evidence on income and price elasticities of demand and supply of agricultural exports from developing countries, on the basis of (a) a consistent and fully specified supply and demand model, and (b) statistical estimation procedures not frequently used in the estimation of agricultural export functions. Estimates of price and income elasticities of demand for aggregate agricultural exports for all developing countries taken together — as distinct from individual exporting countries — are found to be low; moreover, export price as distinguished from non-price factors plays a relatively insignificant role in increasing export supply. Hence, an attempt by all developing countries to expand traditional agricultural exports with low price elasticity of demand may not yield rising earnings for all; but in fact may result in falling export revenues. Insofar as individual exports of all developing countries (not individual countries) are concerned, income and price elasticities of demand for such tropical commodities as tea, coffee, cocoa and bananas are also found to be low, except for new, non-traditional exports like pineapples. This indicates the importance of diversification of agricultural exports as a vehicle for their future growth.