Advanced Search
MyIDEAS: Login to save this paper or follow this series

Dominant Retailers and the Countervailing Power Hypothesis

Contents:

Author Info

Abstract

The growing dominance of powerful big-box retailers in recent years has enhanced the interests in Galbraith's (1952) hypothesis of countervailing power. The objective of this paper is to assess rigorously this hypothesis using a theoretical model that captures the main ingredients of Galbraith's arguments as well as some of the important features of retail industry. It is demonstrated that consistent with the hypothesis an increase in the amount of countervailing power possessed by a dominant retailer can indeed lead to a fall in retail price for consumers. But this fall in retail price is not the result of a benevolent retailer acting on behalf of consumers but of a self-interested supplier trying to offset the reduction in profits caused by the rise in countervailing power. Total surplus does not always increase with the rise of countervailing power because of the possible efficiency loss on production side. Furthermore, the presence of fringe competition is crucial for countervailing power to benefit consumers and that there is a limit to how far a dominant retailer will go in its pursuit of countervailing power. The analysis in this paper, therefore, does not support the contention that countervailing power can replace competition as the regulatory mechanism of the economy.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. 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://www1.carleton.ca/economics/research/working-papers/carleton-economic-papers-cep-2001-2010/
Download Restriction: no

Bibliographic Info

Paper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 01-05.

as in new window
Length: 34 pages
Date of creation: 2001
Date of revision: 2003
Publication status: Published: Revised version in RAND Journal of Economics, Vol. 34, No. 4 (Winter 2003), pp. 612–625
Handle: RePEc:car:carecp:01-05

Contact details of provider:
Postal: 1125 Colonel By Drive, Ottawa Ontario, K1S 5B6 Canada
Phone: 1-613-520-3744
Fax: 1-613-520-3906

Order Information:
Email:

Related research

Keywords: countervailing power; buyer power; dominant firm;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:car:carecp:01-05. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Renee Lortie).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.