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Bargaining Power and Local Heroes

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  • Heimeshoff, Ulrich
  • Klein, Gordon

Abstract

Retailer bargaining power is an important aspect of many international antitrust investigations. Size and market share analysis are often the cornerstones of bargaining power identi cation. However, other factors, like consumer behavior, i.e. "one-stop shopping", can heavily a ect the bargaining environment. We show and quantify, analyzing a natural experiment of a supply boycott of small local beer breweries towards a national retailer, that "one-stop shopping" leads to severe purchasing externalities, which is a novel nding. This results in a shift in the bargaining position in favor of the manufacturer, which is elevant for antitrust investigations. Neglecting those externalities in investigations and focusing mainly on size arguments may lead to a wrong assessment of bargaining power. Therefore a careful a case by case analysis of bargaining power is necessary in antitrust investigations.

Suggested Citation

  • Heimeshoff, Ulrich & Klein, Gordon, 2014. "Bargaining Power and Local Heroes," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100475, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc14:100475
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    Cited by:

    1. Haucap, Justus & Heimeshoff, Ulrich & Klein, Gordon J. & Rickert, Dennis & Wey, Christian, 2013. "Wettbewerbsprobleme im Lebensmitteleinzelhandel," DICE Ordnungspolitische Perspektiven 48, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    2. Bjørn Olav Johansen & Tore Nilssen, 2016. "The Economics of Retailing Formats: Competition Versus Bargaining," Journal of Industrial Economics, Wiley Blackwell, vol. 64(1), pages 109-134, March.
    3. Haucap, Justus & Heimeshoff, Ulrich & Klein, Gordon J. & Rickert, Dennis & Wey, Christian, 2013. "Bargaining power in manufacturer-retailer relationships," DICE Discussion Papers 107, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

    More about this item

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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