IDEAS home Printed from https://ideas.repec.org/a/bla/jeurec/v9y2011i4p702-720.html

Countervailing Power And Dynamic Efficiency

Author

Listed:
  • Roman Inderst
  • Christian Wey

Abstract

This paper studies the impact of buyer power on dynamic efficiency. We consider a bargaining model in which buyer power arises endogenously from size and may impact on a supplier's incentives to invest in lower marginal cost. We challenge the view frequently expressed in policy circles that the exercise of buyer power stifles suppliers' incentives. Instead, we find that the presence of larger buyers keeps a supplier 'more on his toes' and induces him to improve the competitiveness of his offering, in terms of both price and quality, relative to buyers' alternative options.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Roman Inderst & Christian Wey, 2011. "Countervailing Power And Dynamic Efficiency," Journal of the European Economic Association, European Economic Association, vol. 9(4), pages 702-720, August.
    • Handle: RePEc:bla:jeurec:v:9:y:2011:i:4:p:702-720
    DOI: j.1542-4774.2011.01028.x
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/j.1542-4774.2011.01028.x
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/j.1542-4774.2011.01028.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

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


    Cited by:

    1. Zhiqi Chen & Hong Ding & Zhiyang Liu, 2016. "Downstream Competition and the Effects of Buyer Power," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(1), pages 1-23, August.
    2. Inderst, Roman & Jakubovic, Zlata & Jovanovic, Dragan, 2015. "Buyer Power and Functional Competition for Innovation," MPRA Paper 61214, University Library of Munich, Germany.
    3. Liesbeth Colen & Zohra Bouamra-Mechemache & Victoria Daskalova & Kjersti Nes, 2020. "Retail alliances in the agricultural and food supply chain," JRC Research Reports JRC120271, Joint Research Centre.
    4. Chrysovalantou Milliou & Joel Sandonis, 2018. "Manufacturer Mergers and Product Variety in Vertically Related Markets," Journal of Industry, Competition and Trade, Springer, vol. 18(1), pages 1-24, March.
    5. Banerjee, Somnath & Stock, Axel, 2018. "Retailer Dominance and Quality Variation: Observations and a Theoretical Explanation," Journal of Retailing, Elsevier, vol. 94(4), pages 408-418.
    6. Gu, Yiquan & Wenzel, Tobias, 2012. "Transparency, entry, and productivity," Economics Letters, Elsevier, vol. 115(1), pages 7-10.
    7. Katja Greer, 2024. "Learning‐by‐doing and contract choice," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 33(3), pages 706-747, August.
    8. Fumagalli, Chiara & Motta, Massimo & Ronde, Thomas, 2009. "Exclusive Dealing: The Interaction between Foreclosure and Investment Promotion," Institutions and Markets Papers 56213, Fondazione Eni Enrico Mattei (FEEM).
    9. Roman Inderst & Christian Wey, 2011. "Countervailing Power And Dynamic Efficiency," Journal of the European Economic Association, European Economic Association, vol. 9(4), pages 702-720, August.
    10. Clémence Christin, 2013. "Entry Deterrence Through Cooperative R&D Over-Investment," Recherches économiques de Louvain, De Boeck Université, vol. 79(2), pages 5-26.
    11. Heimeshoff, Ulrich & Klein, Gordon J., 2013. "Bargaining power and local heroes," DICE Discussion Papers 87, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    12. Germain Gaudin, 2018. "Vertical Bargaining and Retail Competition: What Drives Countervailing Power?," Economic Journal, Royal Economic Society, vol. 128(614), pages 2380-2413, September.
    13. Matsushima, Noriaki & Shinohara, Ryusuke, 2014. "What factors determine the number of trading partners?," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 428-441.
    14. Alipranti, Maria & Milliou, Chrysovalantou & Petrakis, Emmanuel, 2015. "On vertical relations and the timing of technology adoption," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 117-129.
    15. Stühmeier Torben & Wenzel Tobias, 2012. "Regulating Advertising in the Presence of Public Service Broadcasting," Review of Network Economics, De Gruyter, vol. 11(2), pages 1-23, June.
    16. Qiu Zhao, 2019. "The Influence of Buyer Power on Supply Chain Pricing with Downstream Competition," Sustainability, MDPI, vol. 11(10), pages 1-19, May.
    17. Bjørn Olav Johansen & Tore Nilssen, 2016. "The Economics of Retailing Formats: Competition Versus Bargaining," Journal of Industrial Economics, Wiley Blackwell, vol. 64(1), pages 109-134, March.
    18. Haucap, Justus & Herr, Annika & Frank, Björn, 2011. "In vino veritas: Theory and evidence on social drinking," DICE Discussion Papers 37, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    19. 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.
    20. Pio Baake & Vanessa Schlippenbach, 2011. "Quality distortions in vertical relations," Journal of Economics, Springer, vol. 103(2), pages 149-169, June.
    21. Inderst, Roman & Obradovits, Martin, 2021. "Loss Leading as a Threat to Brands," EconStor Preprints 253667, ZBW - Leibniz Information Centre for Economics.
    22. Köhler, Christian & Rammer, Christian, 2012. "Buyer power and suppliers' incentives to innovate," ZEW Discussion Papers 12-058, ZEW - Leibniz Centre for European Economic Research.
    23. Álvaro Parra & Guillermo Marshall, 2024. "Monopsony Power and Upstream Innovation," Journal of Industrial Economics, Wiley Blackwell, vol. 72(2), pages 1005-1020, June.
    24. Mérel, Pierre & Sexton, Richard J., 2017. "Buyer power with atomistic upstream entry: Can downstream consolidation increase production and welfare?," International Journal of Industrial Organization, Elsevier, vol. 50(C), pages 259-293.
    25. Maria Alipranti & Emmanuel Petrakis, 2022. "Upstream market structure and the timing of technology adoption," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1298-1310, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jeurec:v:9:y:2011:i:4:p:702-720. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/eeaaaea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.