EconPapers    
Economics at your fingertips  
 

Bargaining Power and the Effects of Joint Negotiation: The “Recapture Effect”

Craig Peters
Additional contact information
Craig Peters: Economic Analysis Group, U.S. Department of Justice

No 201403, EAG Discussions Papers from Department of Justice, Antitrust Division

Abstract: This paper considers the effects of joint negotiation when suppliers and intermediaries engage in bilateral negotiation over inclusion of a supplier’s product in an intermediary’s network. I identify conditions under which joint negotiation by two suppliers increases the suppliers’ bargaining power even when the suppliers’ products are not substitutes for each other. In particular, joint negotiation increases the suppliers’ bargaining power if suppliers face smaller losses from disagreement when they negotiate jointly. If joint negotiation causes an intermediary to lose more of its consumers to competing intermediaries in the event of disagreement, and if the suppliers sell their products through these competing intermediaries, the suppliers will be able to recapture more of the sales that they would otherwise have lost in the event of disagreement. As a result, joint negotiation reduces the suppliers’ losses from disagreement, and thus enhances their bargaining power. I show that these conditions arise under a wide range of assumptions about consumer preferences.

Pages: 38 pages
Date: 2014-09
New Economics Papers: this item is included in nep-com and nep-gth
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www.justice.gov/atr/public/eag/308877a.html (text/html)

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:doj:eagpap:201403

Access Statistics for this paper

More papers in EAG Discussions Papers from Department of Justice, Antitrust Division Department of Justice Antitrust Division 450 Fifth Street NW Washington, DC 20530. Contact information at EDIRC.
Bibliographic data for series maintained by Tung Vu ().

 
Page updated 2024-07-06
Handle: RePEc:doj:eagpap:201403