Retailer Market Concentration, Buyer†Size Discounts and Inflation Dynamics

Mayumi Ojima, Junnosuke Shino and Kozo Ueda

The Japanese Economic Review, 2018, vol. 69, issue 1, 101-127

Abstract: This study considers the macroeconomic effects of retailer market concentration and buyer†size discounts on inflation dynamics. During Japan's “lost decades†, large retailers enhanced their market power, thus increasing the exploitation of buyer†size discounts in the procurement of goods. We incorporate this effect into an otherwise standard New Keynesian model. Calibrating to the Japanese economy during the lost decades, we find that these developments led to a deflation of approximately 0.1% annually.

Date: 2018
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