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An Empirical Analysis of Countervailing Power in Business-to-Business Bargaining

Walter Beckert ()

Review of Industrial Organization, 2018, vol. 52, issue 3, 369-402

Abstract: Abstract Pricing schemes in business-to-business (B2B) relationships reflect price discrimination and bargaining over rents. Bargaining outcomes are determined by upstream market power and countervailing buyer power downstream. This paper uses a panel of B2B transactions in the UK brick market to study B2B transaction prices. The empirical analysis identifies three effects on prices: nonlinear volume and freight absorption effects; countervailing power effects that arise from buyers’ local commercial significance; and competition effects that are due to the buyers’ local potential suppliers. And it shows that small buyers benefit more from competition than do large buyers because they are not constrained by the suppliers’ capacity.

Keywords: Countervailing power; Bargaining; Price discrimination; Transaction data (search for similar items in EconPapers)
JEL-codes: D43 L11 L12 L14 L42 C23 C78 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:kap:revind:v:52:y:2018:i:3:d:10.1007_s11151-017-9607-7