The Limits of Buyer Power: Experimental Evidence

Lisa Bruttel

Review of Behavioral Economics, 2018, vol. 5, issue 2, 149-167

Abstract: This paper studies the behavior of buyers confronting an incumbent monopolist and a potential market entrant in a repeated trade situation. In the experiment, buyers have two possibilities to demand lower prices in future trade periods. First, they can withhold demand. Second, they can voluntarily pay a higher price to the entrant in order to encourage future re-entry. Both these forms of buyer behavior occur in the experiment. They are less frequent when the number of buyers is large as opposed to small. A control treatment tests to what extent such behavior can be attributed to strategic motives.

Keywords: Buyer Power; Market Entry; Experiment (search for similar items in EconPapers)
JEL-codes: C91 D43 L11 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:now:jnlrbe:105.00000082

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