Buyer power in large buyer groups?

Lisa Bruttel

No 92, TWI Research Paper Series from Thurgauer Wirtschaftsinstitut, Universität Konstanz

Abstract: This paper studies the exertion of market power in large buyer groups confronting an incumbent monopolist and a potential market entrant in a repeated trade situation. In the experiment, buyer power can either occur as demand withholding when only the incumbent is present in the market, or it can take the form of buying at higher prices from the entrant in order to foster future re-entry. Comparing markets with groups of two and eight buyers, we find that both forms are prevalent irrespective of the number of buyers. However, a control treatment shows that seemingly strategic behavior is better explained by inequality aversion of the buyers towards the two different sellers.

Keywords: buyer power; market entry; experiment (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-com, nep-exp and nep-ind
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Persistent link: https://EconPapers.repec.org/RePEc:twi:respas:0092

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