 Matching in Vertical Markets: Evidence from the Digital Advertising IndustryAndrea Chiantello, Francesco Decarolis, Maris Goldmanis, Antonio Penta and Ksenia Shakhgildyan No 22077, CEPR Discussion Papers from Centre for Economic Policy Research Abstract: The digital advertising industry relies on specialized intermediaries to facilitate advertisers’ access to online ad space. This paper studies vertical complementarities in this market by estimating a structural model of advertiser–agency matching using novel data and methods for many-to-many matching in large markets. We quantify the value created by matches and introduce a machine-learning approach to infer agents’ consideration sets. The results show that advertisers benefit from being affiliated with the same agency network as their competitors, even though they do not necessarily prefer to share the same agencies. We also document the role of industry specialization, exclusive contracting, and relationship persistence. Finally, we illustrate the policy relevance of our framework by evaluating the potential effects of the Omnicom–IPG merger, showing how network-level consolidation can generate heterogeneous advertiser gains. Keywords: Vertical Markets; Online advertising; Delegation; Matching (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:22077 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK. |
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