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Buyers’ Alliances for Bargaining Power

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  • Suchan Chae
  • Paul Heidhues

Abstract

We provide a novel explanation as to why forming an alliance of buyers (or sellers) across separate markets can be advantageous when input prices are determined by bargaining. Our explanation helps to understand the prevalence of buyer cooperatives among small and medium sized firms. ZUSAMMENFASSUNG - (Verhandlungsmacht durch Käuferkooperationen) Dieses Papier entwickelt eine neue Erklärung dafür, warum Zusammenschlüsse zwischen Käufern (oder Verkäufern), die in unterschiedlichen Märkten aktiv sind, deren Verhandlungsmacht stärken können. Unser Ansatz kann unter anderem erklären, warum sich kleinere und mittlere Unternehmen oft zu Einkaufsgenossenschaften zusammenschließen.

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Bibliographic Info

Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number SP II 2003-24.

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Length: 42 pages
Date of creation: Dec 2003
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Publication status: Published in the Journal of Economics & Management Strategy , Vol. 13(4), Winter 2004, pp. 731-754.
Handle: RePEc:wzb:wzebiv:spii2003-24

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Keywords: Nash bargaining solution; alternating-offer bargaining; bargaining power; buyer power; cooperatives; input markets.;

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References

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Citations

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Cited by:
  1. Battigalli, Pierpaulo & Fumagalli, Chiara & Polo, Michele, 2006. "Buyer Power and Quality Improvements," CEPR Discussion Papers 5814, C.E.P.R. Discussion Papers.
  2. Inderst, Roman & Wey, Christian, 2005. "How Strong Buyers Spur Upstream Innovation," CEPR Discussion Papers 5365, C.E.P.R. Discussion Papers.
  3. Aldo González & Loreto Ayala, 2012. "Does Input Purchase Cooperation Foster Downstream Collusion?," Working Papers wp358, University of Chile, Department of Economics.
  4. Davis, David E., 2011. "Buyer Alliances as Countervailing Power in WIC Infant-Formula Auctions," SDSU Working Papers in Progress 12011, South Dakota State University, Department of Economics.
  5. Chiara Fumagalli & Massimo Motta, 2008. "Buyers' Miscoordination, Entry and Downstream Competition," Economic Journal, Royal Economic Society, vol. 118(531), pages 1196-1222, 08.
  6. Inderst, Roman & Wey, Christian, 2002. "Buyer Power and Supplier Incentives," CEPR Discussion Papers 3547, C.E.P.R. Discussion Papers.
  7. Alderighi, Marco, 2007. "The role of buying consortia among SMEs in the electricity market in Italy," Energy Policy, Elsevier, vol. 35(6), pages 3463-3472, June.
  8. Chakrabarti, Subhadip & Tangsangasaksri, Supanit, 2011. "Labor unions and Nash bargaining using coalition formation games," Mathematical Social Sciences, Elsevier, vol. 62(1), pages 55-64, July.
  9. Dana, James D., 2012. "Buyer groups as strategic commitments," Games and Economic Behavior, Elsevier, vol. 74(2), pages 470-485.
  10. Johansen, Bjørn Olav, 2012. "The Buyer Power Of Multiproduct Retailers: Competition With One-Stop Shopping," Working Papers in Economics 03/12, University of Bergen, Department of Economics.
  11. Chris Doyle & Martijn A. Han, 2012. "Cartelization Through Buyer Groups," SFB 649 Discussion Papers SFB649DP2012-059, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  12. Chris Doyle & Martijn Han, 2014. "Cartelization Through Buyer Groups," Review of Industrial Organization, Springer, vol. 44(3), pages 255-275, May.
  13. David Mills, 2013. "Countervailing Power and Chain Stores," Review of Industrial Organization, Springer, vol. 42(3), pages 281-295, May.

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