Ad Exchange: Envy-Free Auctions with Mediators

  • Oren Ben-Zwi
  • Monika Henzinger
  • Veronika Loitzenbauer
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 9470)


Ad exchanges are an emerging platform for trading advertisement slots on the web with billions of dollars revenue per year. Every time a user visits a web page, the publisher of that web page can ask an ad exchange to auction off the ad slots on this page to determine which advertisements are shown at which price. Due to the high volume of traffic, ad networks typically act as mediators for individual advertisers at ad exchanges. If multiple advertisers in an ad network are interested in the ad slots of the same auction, the ad network might use a “local” auction to resell the obtained ad slots among its advertisers.

In this work we want to deepen the theoretical understanding of these new markets by analyzing them from the viewpoint of combinatorial auctions. Prior work studied mostly single-item auctions, while we allow the advertisers to express richer preferences over multiple items. We develop a game-theoretic model for the entanglement of the central auction at the ad exchange with the local auctions at the ad networks. We consider the incentives of all three involved parties and suggest a three-party competitive equilibrium, an extension of the Walrasian equilibrium that ensures envy-freeness for all participants. We show the existence of a three-party competitive equilibrium and a polynomial-time algorithm to find one for gross-substitute bidder valuations.


Ad-exchange Combinatorial auctions Gross substitute Walrasian equilibrium Three-party equilibrium Auctions with mediators 



We wish to thank Noam Nisan for helpful discussions.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2015

Open Access This chapter is distributed under the terms of the Creative Commons Attribution Noncommercial License, which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.

Authors and Affiliations

  • Oren Ben-Zwi
    • 1
  • Monika Henzinger
    • 2
  • Veronika Loitzenbauer
    • 2
  1. 1.Emarsys LabsEmarsys eMarketing Systems AGViennaAustria
  2. 2.Faculty of Computer ScienceUniversity of ViennaViennaAustria

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