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Cartelization Through Buyer Groups

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  • Chris Doyle

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  • Martijn Han

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Abstract

Retailers may enjoy stable cartel rents in their output market through the formation of a buyer group in their input market. A buyer group allows retailers to commit credibly to increased input prices, which serve to reduce combined final output to the monopoly level; increased input costs are then refunded from suppliers to retailers through slotting allowances or rebates. The stability of such an ‘implied cartel’ depends on the retailers’ incentives to source their inputs secretly from a supplier outside of the buyer group arrangement at lower input prices. Cheating is limited if retailers sign exclusive dealing or minimum purchase provisions. We discuss the relevancy of our findings for antitrust policy. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Chris Doyle & Martijn Han, 2014. "Cartelization Through Buyer Groups," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(3), pages 255-275, May.
  • Handle: RePEc:kap:revind:v:44:y:2014:i:3:p:255-275
    DOI: 10.1007/s11151-013-9375-y
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    File URL: http://hdl.handle.net/10.1007/s11151-013-9375-y
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:indorg:v:53:y:2017:i:c:p:353-370 is not listed on IDEAS
    2. Øystein Foros & Hans Jarle Kind, 2017. "Upstream Partnerships among Competitors when Size Matters," CESifo Working Paper Series 6512, CESifo Group Munich.

    More about this item

    Keywords

    Buyer groups; Collusion; Cartels; Exclusive dealing; Minimum purchase clauses; Rebates; K21; L13; L41; L42;

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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