CInSt Research Seminar
Andrey Tkachenko (HSE University) has presented his paper "Competitive effect of vertical integration in auctions" on traditional CInSt research seminar on November, 12. Watch the video of the seminar following the link below.
This paper studies the competitive effect of vertical integration between pharmaceutical drug producers and distributors in an auction setting. Exploiting data on 850 thousand public procurement auctions supplying 2.6 million of drugs in Russia, I identify the causal effect of vertical integration on procurement prices. This effect is non-monotonic in the level of competition at the upstream level. Vertical integration does not affect the price if a drug is produced by a single firm, while the price increases by 20% if there are few competitive producers. If the drug is produced by many firms, its price decreases by 3% after vertical integration. I propose an auction model with vertical interactions of bidders and upstream input suppliers explaining these empirical findings.