Essays on Market Design and Information Provision in Digital Advertising

Abstract

This dissertation highlights how privacy regulation and information disclosure affect different segments of the digital advertising industry through distinct informational channels, with implications for participation and efficiency in exchange and direct markets. In exchange markets, advertisers compete in real-time auctions where participation and bidding depend on granular consumer-level information, such as that enabled by third-party cookies. I show that this information improves matching but reduces market thickness by concentrating participation, so data privacy rules that restrict consumer identifiers alter competition and efficiency in exchanges. In contrast, direct transactions typically involve buying advertising inventory in bulk and rely less on user-level targeting. Instead, outcomes in direct markets depend on information about publishers, and the ability to pool and share information across advertisers plays a central role in improving efficiency given the institutional features of direct buying.