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Buyer Power and Mutual Dependency in a Model of Negotiations

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  • Inderst, Roman
  • Montez, João

Abstract

We study bilateral bargaining between several buyers and sellers in a framework that allowsboth sides, in case of a bilateral disagreement, flexibility to adjust trade with each of their othertrading partners and receive the gross benefit generated by each adjustment. A larger buyer paysa higher per-unit price when buyers’ bargaining power in bilateral negotiations is sufficientlylow, and a lower price otherwise. An analogous result holds for sellers. These predictions, andthe implications of different technologies, are explained by the fact that size is a source of mutualdependency and not an unequivocal source of power.

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  • Inderst, Roman & Montez, João, 2019. "Buyer Power and Mutual Dependency in a Model of Negotiations," CEPR Discussion Papers 13644, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13644
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    Cited by:

    1. Inderst, Roman & Obradovits, Martin, 2021. "Loss Leading as a Threat to Brands," EconStor Preprints 253667, ZBW - Leibniz Information Centre for Economics.
    2. Evensen, Charlotte B. & Foros, Øystein & Haugen, Atle & Kind, Hans Jarle, 2021. "Size-based input price discrimination under endogenous inside options," Discussion Paper Series in Economics 6/2021, Norwegian School of Economics, Department of Economics.
    3. Daiqiang Zhang, 2021. "Testing Passive Versus Symmetric Beliefs In Contracting With Externalities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(2), pages 723-767, May.
    4. Armel Jacques, 2019. "Les enjeux du rachat de Vindémia : quelques éléments de théorie économique," Post-Print hal-03546561, HAL.
    5. Inderst, Roman & Obradovits, Martin, 2020. "Why Brand Manufacturers Should Take Loss Leading Seriously," EconStor Preprints 253663, ZBW - Leibniz Information Centre for Economics.
    6. Dubois, Pierre & Lefouili, Yassine & Straub, Stéphane, 2021. "Pooled procurement of drugs in low and middle income countries," European Economic Review, Elsevier, vol. 132(C).
    7. Hugo Molina, 2024. "Buyer Alliances in Vertically Related Markets," Working Papers hal-03340176, HAL.
    8. 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.
    9. Qiu Zhao, 2019. "The Influence of Buyer Power on Supply Chain Pricing with Downstream Competition," Sustainability, MDPI, vol. 11(10), pages 1-19, May.

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