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The Role Of Firm Size In Bilateral Bargaining: A Study Of The Cable Television Industry

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Author Info
Tasneem Chipty
Christopher M. Snyder
Abstract

We examine the effect of buyer merger on bilateral negotiations between a supplier and n buyers. Merger may have bargaining effects in addition to the usual efficiency effects. The effect of merger on the buyers' bargaining position depends on the curvature of the supplier's gross surplus function: merger enhances (worsens) the buyers' bargaining position if the function is concave (convex). Based on a panel of advertising revenue in the cable television industry, our estimates indicate that the gross surplus function for suppliers of program services is convex. This result suggests that cable operators integrate horizontally to realize efficiency gains rather than to enhance their bargaining position vis-a-vis program suppliers. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technolog

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Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 81 (1999)
Issue (Month): 2 (May)
Pages: 326-340
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Handle: RePEc:tpr:restat:v:81:y:1999:i:2:p:326-340

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  2. Evan Kwerel & Johathan Levy & Robert Pepper & David Sappington & Donald Stockdale & John Williams, 2002. "Economic Issues at the Federal Communications Commission," Review of Industrial Organization, Springer, vol. 21(4), pages 337-356, December. [Downloadable!] (restricted)
  3. 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!]
  4. 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!]
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  5. Inderst, Roman & Shaffer, Greg, 2004. "Retail Mergers: Buyer Power and Product Variety," CEPR Discussion Papers 4236, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  6. Suchan Chae & Paul Heidhues, 1999. "The Effects of Downstream Distributor Chains on Upstream Producer Entry: A Bargaining Perspective," CIG Working Papers FS IV 99-35, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
  7. Douglas D. Davis & Bart J. Wilson, 2006. "Strategic Buyers, Horizontal Mergers and Synergies: An Experimental Investigation," Working Papers 0601, VCU School of Business, Department of Economics. [Downloadable!]
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  10. Suchan Chae & Paul Heidhues, 2003. "Buyers’ Alliances for Bargaining Power," CIG Working Papers SP II 2003-24, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
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  11. Dong Chen & David Waterman, 2007. "Vertical Ownership, Program Network Carriage, and Tier Positioning in Cable Television: An Empirical Study," Review of Industrial Organization, Springer, vol. 30(3), pages 227-251, May. [Downloadable!] (restricted)
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  13. Baldursson, Fridrik M. & Johannesson, Sigurdur, 2005. "Kaupendamáttur á sementsmarkaði
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  14. 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!]
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  15. Francesco Passarelli, 2007. "Asymmetric Bargaining," ISLA Working Papers 26, ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy, revised Jan 2007. [Downloadable!]
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  17. Smith, Howard & Thanassoulis, John, 2006. "Upstream Competition and Downstream Buyer Power," CEPR Discussion Papers 5803, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  18. Claire Chambolle & Sofia Villas-Boas, 2008. "Buyer Power through Producer's Differentiation," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series 1042, Department of Agricultural & Resource Economics, UC Berkeley. [Downloadable!]
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