Bargaining Power and Quantity Discounts to Retailers: Evidence from India’s Pharmaceutical Industry

Gianluca Antonecchia, Ajay Bhaskarabhatla and Enrico Pennings
Additional contact information
Gianluca Antonecchia: KU Leuven
Ajay Bhaskarabhatla: Erasmus School of Economics
Enrico Pennings: Erasmus School of Economics

No 24-048/VII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This paper develops a novel theory linking quantity discounts to bargaining power in scenarios where retailers, organized as a trade association, negotiate uni- form wholesale prices with suppliers. Our theory predicts that suppliers offer greater quantity discounts in regional markets where they possess relatively less bargaining power, as a counterbalance to the higher national wholesale prices negotiated by the retailer trade association. We test these predictions using detailed product-level data from the Indian pharmaceutical industry, where significant geographic variations in quantity discounts are observed. Our findings provide empirical support for the proposed theory.

Keywords: quantity discounts; bargaining power; pharmaceuticals; India (search for similar items in EconPapers)
JEL-codes: D22 L11 L42 (search for similar items in EconPapers)
Date: 2024-07-19
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://papers.tinbergen.nl/24048.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20240048

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 (discussionpapers@tinbergen.nl).