Empirical analysis of buyer power
This paper provides a comprehensive econometric framework for the empirical analysis of buyer power. It encompasses the two main features of pricing schemes in business-to-business relationships: nonlinear price schedules and bargaining over rents. Disentangling them is critical to the empirical identification of buyer power. Testable predictions from the theoretical analysis are delineated, and a pragmatic empirical methodology is presented. It is readily implementable on the basis of transaction data, routinely collected by antitrust authorities. The empirical framework is illustrated using data from the UK brick industry. The paper emphasizes the importance of controlling for endogeneity of volumes and for heterogeneity across buyers and sellers.
|Date of creation:||11 Jul 2009|
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References listed on IDEAS
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- Smith, Howard & Thanassoulis, John, 2006.
"Upstream Competition and Downstream Buyer Power,"
CEPR Discussion Papers
5803, C.E.P.R. Discussion Papers.
- Monica Giulietti, 2007. "Buyer and seller power in grocery retailing: evidence from Italy," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO, December.
- Sofia Berto Villas-Boas, 2007.
"Vertical Relationships between Manufacturers and Retailers: Inference with Limited Data,"
Review of Economic Studies,
Oxford University Press, vol. 74(2), pages 625-652.
- Villas-Boas, Sofia B., 2006. "Vertical relationships between manufacturers and retailers: inference with limited data," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0z26d2v9, Department of Agricultural & Resource Economics, UC Berkeley.
- Villas-Boas, Sofia B., 2007. "Vertical relationships between manufacturers and retailers: inference with limited data," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6gz1t778, Department of Agricultural & Resource Economics, UC Berkeley.
- Tasneem Chipty & Christopher M. Snyder, 1999. "The Role Of Firm Size In Bilateral Bargaining: A Study Of The Cable Television Industry," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 326-340, May.
- Dobson, Paul W & Waterson, Michael, 1997. "Countervailing Power and Consumer Prices," Economic Journal, Royal Economic Society, vol. 107(441), pages 418-430, March.
- Lustgarten, Steven H, 1975. "The Impact of Buyer Concentration in Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 57(2), pages 125-132, May.
- Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
- William Boulding & Richard Staelin, 1990. "Environment, Market Share, and Market Power," Management Science, INFORMS, vol. 36(10), pages 1160-1177, October.
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