Retail Mergers: Buyer Power and Product Variety

Roman Inderst and Greg Shaffer

No 4236, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper analyses the impact of retail mergers on product variety. We show that a merging firm may want to enhance its buyer power vis a vis suppliers by delisting products and committing to a ?single-sourcing? purchasing strategy. Anticipating this, suppliers will strategically choose to produce less differentiated products, which further reduces product variety. If negotiations are efficient the loss in product variety reduces overall industry profit and, possibly, also consumer welfare. With linear tariffs, however, there may be a countervailing effect as the more powerful retailer passes on lower input prices to final consumers.

Keywords: Buyer power; Retailing; Horizontal mergers (search for similar items in EconPapers)
JEL-codes: L00 (search for similar items in EconPapers)
Date: 2004-02
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Retail Mergers, Buyer Power and Product Variety (2007)
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