Optimal contract and pricing decisions for online display advertisement

This paper considers a contract and pricing decision problem in online display advertisements. We model the entire decision process as a Stackelberg game that involves one advertiser and one publisher. As the game leader, the publisher initiates the game by setting cost-per-impression (CPM) under pay-per-view (PPV) pricing scheme or cost-per-click (CPC) under pay-per-click (PPC) pricing scheme, and each player aims at maximizing her own expected revenue. We show the existences of the publisher´s unique best response for both pricing schemes and analyze how the optimal decision will change as parameters change.