This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

A Dynamic Theory of Countervailing Power

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Christopher M. Snyder
Abstract

In this article I develop a model of an infinitely repeated procurement auction with one buyer and several sellers. The buyer can accumulate a backlog of unfilled orders which, similar to a boom in demand, forces the sellers t o collude on a low price to prevent undercutting. If the buyer's cost of shifting its consumption over time is low enough, then the extent of collusion is bounded away from the joint-profit-maximizing level even for discount factors approaching one. The model is extended to allow for multiple buyers. Large buyers are shown to obtain lower prices from the sellers. Buyer mergers increase profit for all buyers, not just the merging pair, at the expense of the sellers. In contrast, buyer growth through addition harms buyers that do not grow and benefits sellers.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://links.jstor.org/sici?sici=0741-6261%28199624%2927%3A4%3C747%3AADTOCP%3E2.0.CO%3B2-K&origin=repec
File Format: application/pdf
File Function: full text
Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 27 (1996)
Issue (Month): 4 (Winter)
Pages: 747-769
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:rje:randje:v:27:y:1996:i:winter:p:747-769

Contact details of provider:
Web page: http://www.rje.org

Order Information:
Web: http://gemini.econ.umd.edu/cgi-bin/rje_online.cgi

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords:

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Pierpaolo Battigalli & Chiara Fumagalli & Michele Polo, 2006. "Buyer Power and Quality Improvement," Working Papers 310, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
    Other versions:
  2. Baldursson, Fridrik M. & Johannesson, Sigurdur, 2005. "Kaupendamáttur á sementsmarkaði
    [Buyer power in the cement industry]
    ," MPRA Paper 14742, University Library of Munich, Germany. [Downloadable!]
  3. Roman Inderst & Christian Wey, 2003. "Buyer Power and Supplier Incentives," CIG Working Papers SP II 2003-05, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
    Other versions:
  4. Morten Hviid & H. Peter Møllgaard, 2000. "Countervailing Power and Price Transparency," CIE Discussion Papers 2000-01, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
    Other versions:
  5. Selvaggi, Marianao & Vasconcelos, Luis, 2006. "Star Wars: Exclusive Superstars and Collusive Outcomes," FEUNL Working Paper Series wp496, Universidade Nova de Lisboa, Faculdade de Economia. [Downloadable!]
  6. Chiara Fumagalli & Massimo Motta, 2006. "Buyers’ miscoordination, entry, and downstream competition," CSEF Working Papers 152, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
    Other versions:
  7. repec:bep:theadv:v:5:y:2005:i:1:p:1164-1164 is not listed on IDEAS
    Other versions:
  8. Ivaldi, Marc & Jullien, Bruno & Rey, Patrick & Seabright, Paul & Tirole, Jean, 2003. "The Economics of Tacit Collusion," IDEI Working Papers 186, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
  9. Walter Beckert, 2009. "Empirical analysis of buyer power," CeMMAP working papers CWP17/09, Centre for Microdata Methods and Practice, Institute for Fiscal Studies. [Downloadable!]
  10. Howard Smith & John Thanassoulis, 2009. "Upstream Competition and Downstream Buyer Power," Economics Series Working Papers 420, University of Oxford, Department of Economics. [Downloadable!]
    Other versions:
  11. Roman Inderst & Christian Wey, 2000. "Market Structure, Bargaining, and Technology Choice," CIG Working Papers FS IV 00-12, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
  12. Jim Engle-Warnick & Bradley Ruffle, 2002. "Buyer Countervailing Power versus Monopoly Power: Evidence from Experimental Posted-Offer Markets," Economics Papers 2002-W14, Economics Group, Nuffield College, University of Oxford. [Downloadable!]
  13. Inderst, Roman & Wey, Christian, 2005. "How Strong Buyers Spur Upstream Innovation," CEPR Discussion Papers 5365, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  14. Ruffle, Bradley J., 2009. "When Do Large Buyers Pay Less? Experimental Evidence," MPRA Paper 16683, University Library of Munich, Germany. [Downloadable!]
  15. Hans Normann, Bradley Ruffle and Christopher Snyder, 2004. "Do Buyer-Size Discounts Depend on the Curvature of the Surplus Function? Experimental Tests of Bargaining Models," Royal Holloway, University of London: Discussion Papers in Economics 04/01, Department of Economics, Royal Holloway University of London, revised Apr 2004. [Downloadable!]
    Other versions:
  16. Ilya Segal, 2000. "Collusion, Exclusion, and Inclusion in Random-Order Bargaining," Econometric Society World Congress 2000 Contributed Papers 0738, Econometric Society. [Downloadable!]
Statistics
Access and download statistics

Did you know? Over 80% of the top 1000 economists are registered on RePEc.

This page was last updated on 2009-11-13.


This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.