The countervailing power hypothesis when dominant retailers function as sales promoters
We consider a downstream oligopoly model with one dominant and several fringe retailers, who purchase a manufacturing product from a monopoly supplier. We then examine how the supplier's outside option influences the relation between the dominant retailer's bargaining power and the equilibrium retail price. If the market demand shrinks due to a breakdown of bargaining between the supplier and the dominant retailer, who works as a sales promoter for the product, there is a negative relation between the bargaining power and the retail price. Furthermore, retailers' efficiency improvements increase the retail price if the dominant retailer's bargaining power is strong.
|Date of creation:||Oct 2016|
|Contact details of provider:|| Postal: 6-1 Mihogaoka, Ibaraki, Osaka 567-0047|
Web page: http://www.iser.osaka-u.ac.jp/index-e.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alberto Iozzi & Tommaso Valletti, 2014.
"Vertical Bargaining and Countervailing Power,"
American Economic Journal: Microeconomics,
American Economic Association, vol. 6(3), pages 106-135, August.
- Alberto Iozzi & Tommaso Valletti, 2010. "Vertical bargaining and countervailing power," CEIS Research Paper 160, Tor Vergata University, CEIS, revised 28 May 2010.
- Valletti, T & Iozzi, A, 2014. "Vertical bargaining and countervailing power," Working Papers 5958, Imperial College, London, Imperial College Business School.
- Howard P. Marvel & Stephen McCafferty, 1984. "Resale Price Maintenance and Quality Certification," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 346-359, Autumn.
- Zhiqi Chen & Hong Ding & Zhiyang Liu, 2015.
"Downstream Competition and the Effects of Buyer Power,"
Carleton Economic Papers
15-06, Carleton University, Department of Economics.
- 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.
- Zhiqi Chen & Hong Ding, 2013. "Downstream Competition and the Effects of Buyer Power," Working Papers E1308E, University of Ottawa, Department of Economics.
- Inderst, Roman & Shaffer, Greg, 2004.
"Retail Mergers: Buyer Power and Product Variety,"
CEPR Discussion Papers
4236, C.E.P.R. Discussion Papers.
- Gaudin, Germain, 2015. "Vertical bargaining and retail competition: What drives countervailing power?," DICE Discussion Papers 195, Düsseldorf Institute for Competition Economics (DICE), University of Düsseldorf.
- von Ungern-Sternberg, Thomas, 1996. "Countervailing power revisited," International Journal of Industrial Organization, Elsevier, vol. 14(4), pages 507-519, June.
- Dobson, Paul W & Waterson, Michael, 1997. "Countervailing Power and Consumer Prices," Economic Journal, Royal Economic Society, vol. 107(441), pages 418-430, March.
- Wujin Chu & Woosik Chu, 1994. "Signaling Quality by Selling Through a Reputable Retailer: An Example of Renting the Reputation of Another Agent," Marketing Science, INFORMS, vol. 13(2), pages 177-189.
- Gaudin, Germain, 2016.
"Pass-through, vertical contracts, and bargains,"
Elsevier, vol. 139(C), pages 1-4.
- Can Erutku, 2005. "Buying power and strategic interactions," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1160-1172, November.
- Chen, Zhiqi, 2003.
" Dominant Retailers and the Countervailing-Power Hypothesis,"
RAND Journal of Economics,
The RAND Corporation, vol. 34(4), pages 612-625, Winter.
- Zhiqi Chen, 2001. "Dominant Retailers and the Countervailing Power Hypothesis," Carleton Economic Papers 01-05, Carleton University, Department of Economics, revised 2003.
- Clerides, Sofronis & Nearchou, Paris & Pashardes, Panos, 2008. "Intermediaries as quality assessors: Tour operators in the travel industry," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 372-392, January.
When requesting a correction, please mention this item's handle: RePEc:dpr:wpaper:0981. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fumiko Matsumoto)
If references are entirely missing, you can add them using this form.