Single-Item Auctions with a Monopolist Intermediary
Jingyi Liu, Aviad Rubinstein, Ertem Nusret Tas, S. Matthew Weinberg, Qianfan Zhang

TL;DR
This paper analyzes how the presence of a monopolist intermediary affects optimal auction design and revenue outcomes across different timing models, revealing significant revenue losses and strategic complexities.
Contribution
It introduces a new model of single-item auctions with a monopolist intermediary, providing approximation guarantees, impossibility results, and insights into timing effects.
Findings
In seller-first model, arbitrary mechanisms reduce to posted prices.
The intermediary's optimal response is a shifted Myerson auction.
Revenue can be arbitrarily small compared to no-intermediary scenario.
Abstract
Classical optimal auction theory assumes that bids reach the seller directly. We study how this picture changes when a revenue-maximizing intermediary controls access to the seller's auction. Motivated by blockchain auctions, online platforms, and other intermediated markets, we consider a single-item auction with independent private values and a monopolist intermediary who can decide which bidder messages are forwarded to the seller. We establish approximation guarantees and impossibility results across three timing models: seller-first, intermediary-first, and simultaneous. In the seller-first model, arbitrary deterministic seller mechanisms collapse to posted-price mechanisms, and the intermediary's best response is a shifted Myerson auction. This yields a sharp separation: for regular distributions, the seller's revenue can be arbitrarily small relative to the no-intermediary…
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