Purchasing alliances and product variety

Marie-Laure Allain, Rémi Avignon () and Claire Chambolle ()
Additional contact information
Rémi Avignon: CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique
Claire Chambolle: ALISS - Alimentation et sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: We analyze the impact of purchasing alliances on product variety and profit sharing in a setting, in which capacity constrained retailers operate in separated markets and select their assortment in a set of differentiated products offered by heterogeneous suppliers (multinationals vs. local SMEs). Retailers may either have independent listing strategies or build a buying group, thereby committing to a joint listing strategy. This alliance may cover the whole product line (full buying group) or only the products of large suppliers (partial buying group). We show that a buying group may enhance the retailers' buyer power and reduce the overall product variety to the detriment of consumers. Our most striking result is that partial buying groups do not protect the small suppliers from being excluded or from bearing profit losses; they may even be more profitable for retailers than full buying groups.

Keywords: Vertical relations; Purchasing alliance; Buying group; Buyer power; Vertical foreclosure (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-com and nep-isf
Note: View the original document on HAL open archive server: https://hal.science/hal-03341448v1
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Citations: View citations in EconPapers (8)

Published in International Journal of Industrial Organization, 2020, 73, ⟨10.1016/j.ijindorg.2020.102641⟩

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Journal Article: Purchasing alliances and product variety (2020)
Working Paper: Purchasing Alliances and Product Variety (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03341448

DOI: 10.1016/j.ijindorg.2020.102641

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