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Digital Ecosystems: The Adtech Tax and Content Quality

Author

Listed:
  • Anna D'Annunzio
  • Antonio Russo
  • Shiva Shekhar

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.

Suggested Citation

  • Anna D'Annunzio & Antonio Russo & Shiva Shekhar, 2024. "Digital Ecosystems: The Adtech Tax and Content Quality," CESifo Working Paper Series 11400, CESifo.
    • Handle: RePEc:ces:ceswps:_11400
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    References listed on IDEAS

    as
    1. Anna D’Annunzio & Antonio Russo, 2020. "Ad Networks and Consumer Tracking," Management Science, INFORMS, vol. 66(11), pages 5040-5058, November.
    2. Oliver Latham & Mikaël Hervé & Romain Bizet, 2021. "Antitrust concerns in Ad-Tech: formalizing the combined effect of multiple conducts and behaviours," European Competition Journal, Taylor & Francis Journals, vol. 17(2), pages 353-390, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    online advertising; intermediaries; vertical integration; adtech tax; content quality;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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