Buyer Alliances in Vertically Related Markets

Hugo Molina

Working Papers from HAL

Abstract: Alliances of buyers to negotiate input prices with suppliers are commonplace. Using pre- and post-alliances data on bottled water purchases, I develop a structural model of bilateral oligopoly to estimate the effects of three alliances formed by retailers on their bargaining power vis-à-vis manufacturers and retail prices paid by consumers. The results provide evidence of a countervailing buyer power effect that reduces retail prices by more than 7%. Exploring determinants of buyer power, I find that changes in the bargaining ability of retailers play an important role in the countervailing force of the alliances, which otherwise would not have been profitable.

Keywords: Bilateral oligopoly; Countervailing buyer power; Bargaining; Antitrust policy (search for similar items in EconPapers)
Date: 2024-03-18
New Economics Papers: this item is included in nep-agr, nep-com, nep-ind, nep-isf and nep-reg
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-03340176v3
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Citations: View citations in EconPapers (9)

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