Supplier Innovation in the Presence of Buyer Power

Zhiqi Chen

No 14-03, Carleton Economic Papers from Carleton University, Department of Economics

Abstract: A theoretical framework is constructed to derive general conditions under which increased buyer power weakens or strengthens a supplier’s incentive to innovate. These conditions are then applied to two sets of specific models: one on product innovation and the other on process innovation. The analysis shows that the effects of buyer power depend on the type of innovation, the source of buyer power, and the channel through which buyer power manifests itself. It identifies circumstances under which an increase in buyer power has a negative, positive or zero impact on innovation. The welfare consequences of buyer power are also investigated.

Keywords: Buyer power; innovation; product variety (search for similar items in EconPapers)
JEL-codes: L1 L4 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2014-05-14
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino and nep-tid
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Citations: View citations in EconPapers (4)

Published: Carleton Economic Papers

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Related works:
Journal Article: SUPPLIER INNOVATION IN THE PRESENCE OF BUYER POWER (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:car:carecp:14-03

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