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Buyer Alliances in Vertically Related Markets

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  • Hugo Molina

    (ALISS - Alimentation et sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

Alliances of buyers to negotiate input prices with suppliers are commonplace. Using pre- and post-alliances data on bottled water purchases, I develop a structural model of bilateral oligopoly to estimate the effects of three alliances formed by retailers on their bargaining power vis-à-vis manufacturers and retail prices paid by consumers. The results provide evidence of a countervailing buyer power effect that reduces retail prices by more than 7%. Exploring determinants of buyer power, I find that changes in the bargaining ability of retailers play an important role in the countervailing force of the alliances, which otherwise would not have been profitable.

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  • Hugo Molina, 2024. "Buyer Alliances in Vertically Related Markets," Working Papers hal-03340176, HAL.
  • Handle: RePEc:hal:wpaper:hal-03340176
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-03340176v3
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    Cited by:

    1. Marie-Laure Allain & Rémi Avignon & Claire Chambolle & Hugo Molina, 2022. "Buying groups formation: what effects on competition in the retail industry? [Les centrales d’achat : quels enjeux de concurrence ?]," Working Papers halshs-03693375, HAL.
    2. Marie-Laure Allain & Rémi Avignon & Claire Chambolle & Hugo Molina, 2022. "Buying groups formation: what effects on competition in the retail industry? [Formation des groupements d'achat : quels effets sur la concurrence dans le commerce de détail ?]," Working Papers halshs-03693440, HAL.
    3. Marie-Laure Allain & Rémi Avignon & Claire Chambolle & Hugo Molina, 2022. "Buying groups formation: what effects on competition in the retail industry?," Post-Print halshs-03693440, HAL.
    4. repec:hal:wpaper:hal-03375907 is not listed on IDEAS
    5. 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.

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    Keywords

    Bilateral oligopoly; Countervailing buyer power; Bargaining; Antitrust policy;
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