Countervailing Power and Price Transparency

Morten Hviid and Peter Møllgaard

No 2000-01, CIE Discussion Papers from University of Copenhagen. Department of Economics. Centre for Industrial Economics

Abstract: We investigate whether increased transparency about prices may increase the countervailing power exercised by buyers of an intermediate good and whether this will lead to a decrease of intermediate goods prices. We show that, even in a non-cooperative, one-shot model, the most likely outcome of improved transparency is a price increase: Improved transparency will lead sellers to take tougher bargaining stands since more is at stake. The results are related to the experience of the Danish Competition Authority´s practice in the 1990s.

Keywords: negotiated intermediate prices; countervailing power; price transparency (search for similar items in EconPapers)
JEL-codes: L20 L40 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2000-03
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