Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307330 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11400
Publisher: 
CESifo GmbH, Munich
Abstract: 
The adtech industry plays a key role in facilitating connections between digital publishers and advertisers. This paper studies the impact of vertical integration between an intermediary and a major publisher on the online advertising ecosystem and the provision of content. We find that vertical integration enables the intermediary to leverage exclusive access to data, leading to dominance in the intermediation market. As a result, the integrated intermediary is able to collect a larger ad-tech tax from independent publishers by shading its bid for impressions. This practice reduces investments in content by independent publishers, while the integrated publisher increases its investment. Therefore, the net effect of vertical integration on consumer welfare and total welfare can be positive or negative. We discuss potential policy interventions that restore the outcome as under vertical separation.
Subjects: 
online advertising
intermediaries
vertical integration
adtech tax
content quality
JEL: 
D43
D62
L82
M37
Document Type: 
Working Paper
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