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Buyer Structure and Seller Performance in U.S. Manufacturing Industries

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  • Schumacher, Ute

Abstract

The relationship between performance and market structure is investigated, with particular emphasis on the organization of the market on the buyers' side and its effect on seller profit margins. Based on a sample of U.S. manufacturing industries that is stratified according to product group categories as well as degree of seller concentration, it is established that highly concentrated buyers exhibit significant power to impair profitability especially in oligopolistic consumer goods industries. The impact of countervailing power appears to be strong regardless of demand conditions. Copyright 1991 by MIT Press.

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  • Schumacher, Ute, 1991. "Buyer Structure and Seller Performance in U.S. Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 277-284, May.
    • Handle: RePEc:tpr:restat:v:73:y:1991:i:2:p:277-84
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    Cited by:

    1. Bhattacharyya, Sugato & Nain, Amrita, 2011. "Horizontal acquisitions and buying power: A product market analysis," Journal of Financial Economics, Elsevier, vol. 99(1), pages 97-115, January.
    2. Kai Wai Hui & Chuchu Liang & P. Eric Yeung, 2019. "The effect of major customer concentration on firm profitability: competitive or collaborative?," Review of Accounting Studies, Springer, vol. 24(1), pages 189-229, March.
    3. Yukihiko Funaki & Harold Houba & Evgenia Motchenkova, 2020. "Market power in bilateral oligopoly markets with non-expandable infrastructures," International Journal of Game Theory, Springer;Game Theory Society, vol. 49(2), pages 525-546, June.
    4. Rungporn Roengpitya, 2008. "The Effects of Financial Deregulation on Bank Governance: The Panel Data Evidence of the 1990s," Working Papers 2008-08, Monetary Policy Group, Bank of Thailand.
    5. Bradley J. Ruffle, 2005. "Buyer Countervailing Power: A Survey of Experimental Evidence," Working Papers 0512, Ben-Gurion University of the Negev, Department of Economics.
    6. Kim, Taeyeon & Kim, Hyun-Dong & Park, Kwangwoo, 2023. "Customer concentration and firm risk: The role of outside directors from a major customer," Journal of Banking & Finance, Elsevier, vol. 152(C).
    7. Shahrur, Husayn, 2005. "Industry structure and horizontal takeovers: Analysis of wealth effects on rivals, suppliers, and corporate customers," Journal of Financial Economics, Elsevier, vol. 76(1), pages 61-98, April.
    8. Yingying Xin & Xiao Zeng & Zhengying Luo, 2022. "Customers' tone in MD&A disclosure and suppliers' inventory efficiency: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3833-3853, December.
    9. Kale, Jayant R. & Shahrur, Husayn, 2007. "Corporate capital structure and the characteristics of suppliers and customers," Journal of Financial Economics, Elsevier, vol. 83(2), pages 321-365, February.
    10. Martin A. Carree & A. Roy Thurik, 2000. "The Life Cycle of the U.S. Tire Industry," Southern Economic Journal, John Wiley & Sons, vol. 67(2), pages 254-278, October.
    11. Kai Hüschelrath, 2009. "Detection Of Anticompetitive Horizontal Mergers," Journal of Competition Law and Economics, Oxford University Press, vol. 5(4), pages 683-721.
    12. Dan Dhaliwal & Paul N. Michas & Vic Naiker & Divesh Sharma, 2020. "Greater Reliance on Major Customers and Auditor Going‐Concern Opinions," Contemporary Accounting Research, John Wiley & Sons, vol. 37(1), pages 160-188, March.
    13. Shang, Nan & Lin, You & Ding, Yi & Ye, Chengjin & Yan, Jinyue, 2019. "Nodal market power assessment of flexible demand resources," Applied Energy, Elsevier, vol. 235(C), pages 564-577.
    14. Maja Pervan & Marijana Curak & Tomislava Pavic Kramaric, 2017. "The Influence of Industry Characteristics and Dynamic Capabilities on Firms’ Profitability," IJFS, MDPI, vol. 6(1), pages 1-19, December.
    15. Mabel D. Costa & Ahsan Habib, 2021. "Trade credit and cost stickiness," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(1), pages 1139-1179, March.
    16. Hui, Kai Wai & Klasa, Sandy & Yeung, P. Eric, 2012. "Corporate suppliers and customers and accounting conservatism," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 115-135.
    17. Lee, Sang Mook & Jiraporn, Pornsit & Song, Hakjoon, 2020. "Customer concentration and stock price crash risk," Journal of Business Research, Elsevier, vol. 110(C), pages 327-346.
    18. Dhaliwal, Dan & Judd, J. Scott & Serfling, Matthew & Shaikh, Sarah, 2016. "Customer concentration risk and the cost of equity capital," Journal of Accounting and Economics, Elsevier, vol. 61(1), pages 23-48.
    19. Fotopoulos, Georgios & Spence, Nigel, 1999. "Net entry behaviour in Greek manufacturing: consumer, intermediate and capital goods industries," International Journal of Industrial Organization, Elsevier, vol. 17(8), pages 1219-1230, November.
    20. Steven Crawford & Ying Huang & Ningzhong Li & Ziyun Yang, 2020. "Customer Concentration and Public Disclosure: Evidence from Management Earnings and Sales Forecasts†," Contemporary Accounting Research, John Wiley & Sons, vol. 37(1), pages 131-159, March.

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