Same Page Externality in Sponsored Search Auction

When a consumer uses a search engine such as Google, her decision to purchase from an advertisement is influenced by other ads displayed on the search page. This externality makes the advertiser's per Ad click profit depend on the set of other ads visible to the consumer. This paper studies the externality effect on the advertiser's per click profit and consequentially his bid for buying the ad space. The externality and advertiser's value are estimated using inequality conditions derived at the equilibrium. I follow Haile and Tamer (2003) methodology to derive the distribution of the valuation using the equilibrium inequalities