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Buyer power in international markets

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  • Raff, Horst
  • Schmitt, Nicolas

Abstract

This paper investigates the implications for international markets of the existence of retailers/wholesalers with market power. Two main results are shown. First, in the presence of buyer power trade liberalization may lead to retail market concentration. Due to this concentration retail prices may be higher and welfare may be lower in free trade than in autarky, thus reversing the standard effects of trade liberalization. Second, the pro-competitive effects of trade liberalization are weaker under buyer power than under seller power.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 79 (2009)
Issue (Month): 2 (November)
Pages: 222-229

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Handle: RePEc:eee:inecon:v:79:y:2009:i:2:p:222-229

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Web page: http://www.elsevier.com/locate/inca/505552

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Keywords: Buyer power Retailing International trade;

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References

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  1. Emek Basker & Van Pham Hoang, 2011. "Wal-Mart as Catalyst to U.S.-China Trade," Working Papers 01, Development and Policies Research Center (DEPOCEN), Vietnam.
  2. Inderst, Roman & Wey, Christian, 2002. "Buyer Power and Supplier Incentives," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3547, C.E.P.R. Discussion Papers.
  3. Raff, Horst & Schmitt, Nicolas, 2005. "Endogenous vertical restraints in international trade," European Economic Review, Elsevier, vol. 49(7), pages 1877-1889, October.
  4. Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Harvard Institute of Economic Research Working Papers 2118, Harvard - Institute of Economic Research.
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  8. Paul Dobson & Roger Clarke & Stephen Davies & Michael Waterson, 2001. "Buyer Power and its Impact on Competition in the Food Retail Distribution Sector of the European Union," Journal of Industry, Competition and Trade, Springer, Springer, vol. 1(3), pages 247-281, September.
  9. Villas-Boas, Sofia B., 2007. "Vertical relationships between manufacturers and retailers: inference with limited data," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series, Department of Agricultural & Resource Economics, UC Berkeley qt6gz1t778, Department of Agricultural & Resource Economics, UC Berkeley.
  10. Patrick Rey & Jeanine Thal & Thibaud Vergé, 2006. "Slotting Allowances and Conditional Payments," Working Papers, Centre de Recherche en Economie et Statistique 2006-23, Centre de Recherche en Economie et Statistique.
  11. Beata Javorcik & Wolfgang Keller & James Tybout, 2008. "Openness and Industrial Response in a Wal-Mart World: A Case Study of Mexican Soaps, Detergents and Surfactant Producers," The World Economy, Wiley Blackwell, vol. 31(12), pages 1558-1580, December.
  12. Horst Raff & Nicolas Schmitt, 2004. "Exclusive Dealing and Common Agency in International Markets," CESifo Working Paper Series 1168, CESifo Group Munich.
  13. Horst Raff & Nicolas Schmitt, 2008. "Buyer Power in International Markets," Kiel Working Papers 1431, Kiel Institute for the World Economy.
  14. Chen, Zhiqi, 2003. " Dominant Retailers and the Countervailing-Power Hypothesis," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 612-25, Winter.
  15. Martin Richardson, . "Trade Policy and Access to Retail Distribution," EPRU Working Paper Series, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics 97-23, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  16. repec:ccp:journl:v:1:y:2001:i:3:p:247-281 is not listed on IDEAS
  17. Barbara J. Spencer & Ronald W. Jones, 1989. "Vertical Foreclosure and International Trade Policy," NBER Working Papers 2920, National Bureau of Economic Research, Inc.
  18. Greg Shaffer, 1991. "Slotting Allowances and Resale Price Maintenance: A Comparison of Facilitating Practices," RAND Journal of Economics, The RAND Corporation, vol. 22(1), pages 120-135, Spring.
  19. Dobson, Paul W & Waterson, Michael, 1997. "Countervailing Power and Consumer Prices," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 107(441), pages 418-30, March.
  20. von Ungern-Sternberg, Thomas, 1996. "Countervailing power revisited," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 14(4), pages 507-519, June.
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