Economics at your fingertips  

On the unprofitability of buyer groups when sellers compete

Doh-Shin Jeon and Domenico Menicucci

Games and Economic Behavior, 2019, vol. 115, issue C, 265-288

Abstract: We study how the formation of a buyer group affects buyer power when sellers compete and buyers operate in separate markets. Previous research (Inderst and Shaffer, 2007, and Dana, 2012) has considered a buyer group that can commit to an exclusive purchase and has found that the formation of a buyer group strictly increases buyer power unless buyers have identical preferences. In contrast, we assume that no commitment to exclusive purchases is possible. We find that the formation of a buyer group has no effect if each seller's cost function is concave. If it is strictly convex, the buyer group strictly reduces the buyers' total payoff as long as the Pareto-dominant equilibrium for sellers is played when a buyer group is formed.

Keywords: Buyer group; Buyer power; Competition in nonlinear tariffs; Discriminatory offers; Common agency (search for similar items in EconPapers)
JEL-codes: D4 K21 L41 L82 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

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:

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-10-03
Handle: RePEc:eee:gamebe:v:115:y:2019:i:c:p:265-288