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Buyer Power in International Markets

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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 e¤ects of trade liberalization. Second, the pro-competitive effects of trade liberalization are weaker under buyer power than under seller power.

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File URL: http://www.sfu.ca/econ-research/RePEc/sfu/sfudps/dp07-23.pdf
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Bibliographic Info

Paper provided by Department of Economics, Simon Fraser University in its series Discussion Papers with number dp07-23.

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Length: 31
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:sfu:sfudps:dp07-23

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Postal: Department of Economics, Simon Fraser University, 8888 University Drive, Burnaby, BC, V5A 1S6, Canada
Phone: (778)782-3508
Fax: (778)782-5944
Web page: http://www.sfu.ca/economics.html
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Postal: Working Paper Coordinator, Department of Economics, Simon Fraser University, 8888 University Drive, Burnaby, BC, V5A 1S6, Canada
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Web: http://www.sfu.ca/economics/research/publications.html

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Keywords: buyer power; retailing; international trade.;

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References

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  1. Inderst, Roman & Wey, Christian, 2007. "Buyer power and supplier incentives," European Economic Review, Elsevier, vol. 51(3), pages 647-667, April.
  2. Villas-Boas, Sofia B., 2006. "Vertical relationships between manufacturers and retailers: inference with limited data," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0z26d2v9, Department of Agricultural & Resource Economics, UC Berkeley.
  3. James E. Rauch, 2001. "Business and Social Networks in International Trade," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1177-1203, December.
  4. Keller, Wolfgang & Smarzynska Javorcik, Beata & Tybout, James R, 2006. "Openness and Industrial Response in a Wal-Mart World: A Case Study of Mexican Soaps, Detergents and Surfactant Producers," CEPR Discussion Papers 5823, C.E.P.R. Discussion Papers.
  5. Horst Raff & Nicolas Schmitt, 2009. "Buyer Power in International Markets," CESifo Working Paper Series 2755, CESifo Group Munich.
  6. Gereffi, Gary, 1999. "International trade and industrial upgrading in the apparel commodity chain," Journal of International Economics, Elsevier, vol. 48(1), pages 37-70, June.
  7. Spencer, Barbara J & Jones, Ronald W, 1991. "Vertical Foreclosure and International Trade Policy," Review of Economic Studies, Wiley Blackwell, vol. 58(1), pages 153-70, January.
  8. Horst Raff & Nicolas Schmitt, 2000. "Endogenous Vertical Restraints in International Trade," Working Papers dp00-04, CRABE, Department of Economics, Simon Fraser University, revised Feb 2000.
  9. Leslie M. Marx & Greg Shaffer, 2007. "Upfront payments and exclusion in downstream markets," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 823-843, 09.
  10. Raff, Horst & Schmitt, Nicolas, 2004. "Exclusive Dealing and Common Agency in International Markets," Economics Working Papers 2004,09, Christian-Albrechts-University of Kiel, Department of Economics.
  11. repec:cup:cbooks:9780521622097 is not listed on IDEAS
  12. 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, vol. 1(3), pages 247-281, September.
  13. Zhiqi Chen, 2001. "Dominant Retailers and the Countervailing Power Hypothesis," Carleton Economic Papers 01-05, Carleton University, Department of Economics, revised 2003.
  14. Martin Richardson, . "Trade Policy and Access to Retail Distribution," EPRU Working Paper Series 97-23, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  15. Dobson, Paul W & Waterson, Michael, 1997. "Countervailing Power and Consumer Prices," Economic Journal, Royal Economic Society, vol. 107(441), pages 418-30, March.
  16. von Ungern-Sternberg, Thomas, 1996. "Countervailing power revisited," International Journal of Industrial Organization, Elsevier, vol. 14(4), pages 507-519, June.
  17. 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.
  18. Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 589-630, September.
  19. Gordon H. Hanson & Robert C. Feenstra, 2001. "Intermediaries in Entrepot Trade: Hong Kong Re-Exports of Chinese Goods," NBER Working Papers 8088, National Bureau of Economic Research, Inc.
  20. Patrick Rey & Jeanine Thal & Thibaud Vergé, 2006. "Slotting Allowances and Conditional Payments," Working Papers 2006-23, Centre de Recherche en Economie et Statistique.
  21. repec:ccp:journl:v:1:y:2001:i:3:p:247-281 is not listed on IDEAS
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Citations

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Cited by:
  1. Horst Raff & Nicolas Schmitt, 2011. "Manufacturers and Retailers in the Global Economy," CESifo Working Paper Series 3508, CESifo Group Munich.
  2. Horst Raff & Nicolas Schmitt, 2007. "Buyer Power in International Markets," Working Papers dp07-23, CRABE, Department of Economics, Simon Fraser University.
  3. Michael Funke & Yu-Fu Chen, 2009. "Booms, Recessions and Financial Turmoil: A Fresh Look at Investment Decisions under Cyclical Uncertainty," Quantitative Macroeconomics Working Papers 20908, Hamburg University, Department of Economics.
  4. Fabio Musso & Mario Risso & Barbara Francioni, 2011. "Grande distribuzione alimentare e criteri di selezione dei fornitori nella prospettiva dei piccoli e medi produttori," MERCATI E COMPETITIVITÀ, FrancoAngeli Editore, vol. 2011(1), pages 73-92.
  5. Horst Raff & Nicolas Schmitt, 2009. "Imports, Pass-Through, and the Structure of Retail Markets," Kiel Working Papers 1556, Kiel Institute for the World Economy.
  6. Cheptea, Angela & Emlinger, Charlotte & Latouche, Karine, 2012. "Multinational Retailers and Home Country Exports," 2012: New Rules of Trade?, December 2012, San Diego, California 142777, International Agricultural Trade Research Consortium.
  7. Eckel, Carsten, 2009. "International trade and retailing," BERG Working Paper Series 63, Bamberg University, Bamberg Economic Research Group.
  8. Robert Kappel, 2010. "On the Economics of Regional Powers: Comparing China, India, Brazil, and South Africa," GIGA Working Paper Series 145, GIGA German Institute of Global and Area Studies.
  9. Raff, Horst & Schmitt, Nicolas, 2011. "Imports and the structure of retail markets," Economics Working Papers 2011,05, Christian-Albrechts-University of Kiel, Department of Economics.
  10. Felbermayr, Gabriel J. & Jung, Benjamin, 2008. "Trade intermediaries, incomplete contracts, and the choice of export modes," Tübinger Diskussionsbeiträge 317, University of Tübingen, School of Business and Economics.

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