A single advertisement often benefits many parties, for example, an ad for a Samsung laptop benefits Microsoft. We study this phenomenon in search advertising auctions and show that standard solutions, including the status quo ignorance of mutual benefit and a benefit-aware Vickrey-Clarke-Groves mechanism, perform poorly. In contrast, we show that an appropriate first-price auction has nice equilibria in a single-slot ad auction --- all equilibria that satisfy a natural cooperative envy-freeness condition select the welfare-maximizing ad and satisfy an intuitive lower-bound on revenue.
@article{arxiv.1209.0832,
title = {Coopetitive Ad Auctions},
author = {Darrell Hoy and Kamal Jain and Christopher A. Wilkens},
journal= {arXiv preprint arXiv:1209.0832},
year = {2012}
}