Multilateral Market Power in Input-output Networks

Matteo Bizzarri

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: This paper models firm-to-firm trade in a production network as a set of double auctions. Firms have “multilateral market power”, namely, can affect prices in both input and output markets. The size and division of surplus are endogenous and depend only on technology, network position, and consumer preferences. The standard simplifying assumption of price-taking on input markets (“unilateral market power”) has systematic effects: it underestimates the final price and overestimates the surplus going upstream. These phenomena affect the model predictions for the welfare impact of mergers.

Keywords: production networks; oligopoly; double auction; supply function equilibrium (search for similar items in EconPapers)
JEL-codes: D43 D44 D57 L13 (search for similar items in EconPapers)
Date: 2022-06-20, Revised 2026-03-23
New Economics Papers: this item is included in nep-com, nep-dem, nep-ind and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:648

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