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Vertical Integration in Auction Markets

Author

Listed:
  • Sander Onderstal

    (University of Amsterdam and Tinbergen Institute)

  • Ruben van Oosten

    (University of Amsterdam)

Abstract

We analyze vertical integration in auction markets using a symmetric independent private-values model where the auctioneer invests in the auctioned object's quality. We find that the auctioneer invests more after integration. The integrated bidder enjoys a bidding advantage over other bidders. The merging parties benefit from integration, while non-merging bidders are worse off. In a platform setting where the auctioneer is an intermediary and the bidders are sellers on her platform, vertical integration has ambiguous effects on consumer surplus and total welfare. Our results contribute to the ongoing policy debate about platforms self-preferencing, effective competition policy, and digital market regulation.

Suggested Citation

  • Sander Onderstal & Ruben van Oosten, 2025. "Vertical Integration in Auction Markets," Tinbergen Institute Discussion Papers 25-046/VII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20250046
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    File URL: https://papers.tinbergen.nl/25046.pdf
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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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