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The Buyer Power Of Multiproduct Retailers: Competition With One-Stop Shopping

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Abstract

This paper illustrates how, in local retail markets, a multiproduct retailer may gain buyer power when some consumers are one-stop shoppers (multi-product shop-pers). We consider a model where independent suppliers negotiate terms of trade with a large multiproduct retailer and a group of smaller single product retailers, respectively. We find that an increase in the share of one-stop shoppers intensifies the degree of competition between the retailers, and hence reduces the overall industry profit –while at the same time enabling the multiproduct retailer to obtain discounts from its suppliers, in the form of lower fixed fees. We also show that the presence of a large retailer may positively affect the suppliers’incentives to invest in product quality or cost reductions.

Suggested Citation

  • Johansen, Bjørn Olav, 2012. "The Buyer Power Of Multiproduct Retailers: Competition With One-Stop Shopping," Working Papers in Economics 03/12, University of Bergen, Department of Economics.
  • Handle: RePEc:hhs:bergec:2012_003
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    References listed on IDEAS

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    Cited by:

    1. Jorge Florez-Acosta & Daniel Herrera-Araujo, 2017. "Multiproduct retailing and buyer power: The effects of product delisting on consumer shopping behavior," PSE Working Papers halshs-01518146, HAL.

    More about this item

    Keywords

    one-stop shopping; buyer power; dynamic effi- ciency; public policy;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • 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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