Bargaining Power and Local Heroes

Ulrich Heimeshoff and Gordon Klein

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

Abstract: Retailer bargaining power is an important aspect of many international antitrust investigations. Size and market share analysis are often the cornerstones of bargaining power identi cation. However, other factors, like consumer behavior, i.e. "one-stop shopping", can heavily a ect the bargaining environment. We show and quantify, analyzing a natural experiment of a supply boycott of small local beer breweries towards a national retailer, that "one-stop shopping" leads to severe purchasing externalities, which is a novel nding. This results in a shift in the bargaining position in favor of the manufacturer, which is elevant for antitrust investigations. Neglecting those externalities in investigations and focusing mainly on size arguments may lead to a wrong assessment of bargaining power. Therefore a careful a case by case analysis of bargaining power is necessary in antitrust investigations.

JEL-codes: L13 L42 L81 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-com and nep-ind
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Related works:
Working Paper: Bargaining power and local heroes (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:100475

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