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Buyer Power and Product Innovation: Empirical Evidence from the German Food Sector


  • Weiss, Christoph R.
  • Wittkopp, Antje


Substantial increases in retail concentration (particularly in Europe) raise concerns about the welfare implications for consumers. In a formal model, we argue that retailer market power reduces upstream firms incentives to introduce new products. On the basis of a survey of firms in German food manufacturing, the results of a negative binomial regression model supports the proposition of a detrimental effect of retailer market power on product innovations. This effect is mitigated if manufacturing firms also have some market power (countervailing power). Innovations are positively related to firm?s market share in food manufacturing.

Suggested Citation

  • Weiss, Christoph R. & Wittkopp, Antje, 2003. "Buyer Power and Product Innovation: Empirical Evidence from the German Food Sector," FE Working Papers 0303, Christian-Albrechts-University of Kiel, Department of Food Economics and Consumption Studies.
  • Handle: RePEc:zbw:caufew:0303

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    References listed on IDEAS

    1. Heien, Dale & Durham, Cathy, 1991. "A Test of the Habit Formation Hypothesis Using Household Data," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 189-199, May.
    2. Donald R. McDowell & Joyce E. Allen-Smith & Patricia E. McLean-Meyinsse, 1997. "Food Expenditures and Socioeconomic Characteristics: Focus on Income Class," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(5), pages 1444-1451.
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    4. Michalek, J & Keyzer, M A, 1992. "Estimation of a Two-Stage LES-AIDS Consumer Demand System for Eight EC Countries," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 19(2), pages 137-163.
    5. A. Gracia & L.M. Albisu, 2001. "Food consumption in the European Union: Main determinants and country differences," Agribusiness, John Wiley & Sons, Ltd., vol. 17(4), pages 469-488.
    6. Jean D. Kinsey, 1997. "Income and Food Consumption: A Variety of Answers: Discussion," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(5), pages 1461-1464.
    7. Heien, Dale & Wessells, Cathy Roheim, 1990. "Demand Systems Estimation with Microdata: A Censored Regression Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 8(3), pages 365-371, July.
    8. Brosig, Stephan, 2000. "A model of household type specific food demand behaviour in Hungary," IAMO Discussion Papers 30, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
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    More about this item


    Retailer market power; product innovation; food manufacturing;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco


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