Dominant Retailers and the Countervailing-Power Hypothesis
AbstractI assess rigorously the countervailing-power hypothesis using a model that captures the main ingredients of Galbraith's (1952) arguments as well as some of the important features of the retail industry. I demonstrate that an increase in the amount of countervailing power possessed by a dominant retailer can indeed lead to a fall in retail prices for consumers. However, total surplus does not always increase with the rise of countervailing power because of the possible efficiency loss in retailing. Furthermore, the presence of fringe competition is crucial for countervailing power to benefit consumers. Copyright 2003 by the RAND Corporation.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 34 (2003)
Issue (Month): 4 (Winter)
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Web page: http://www.rje.org
Other versions of this item:
- Zhiqi Chen, 2001. "Dominant Retailers and the Countervailing Power Hypothesis," Carleton Economic Papers 01-05, Carleton University, Department of Economics, revised 2003.
- L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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