Buyer Countervailing Power: A Survey of the Theory and Experimental Evidence

26 Pages Posted: 5 Apr 2006

Date Written: December 2005

Abstract

The rise of mega-retailers and industry concentration levels has recently generated an interest among economists and antitrust policymakers in the effects of buyer countervailing power. There exists a considerable theoretical literature offering a range of sources of powerful buyers' ability to extract price discounts. The explanations that have been tested experimentally have all found laboratory support. This paper surveys the theoretical literature on countervailing power, emphasizing experimental tests where available. The increasing policy relevance of this topic and the blossoming of theoretical models contrasted with the dearth of experimental tests point to fruitful directions for research.

Keywords: Buyer power, experimental economics, price discrimination, quantity discounts

JEL Classification: C78, C90, L25

Suggested Citation

Ruffle, Bradley J., Buyer Countervailing Power: A Survey of the Theory and Experimental Evidence (December 2005). Available at SSRN: https://ssrn.com/abstract=894664 or http://dx.doi.org/10.2139/ssrn.894664

Bradley J. Ruffle (Contact Author)

McMaster University ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

HOME PAGE: http://https://socialsciences.mcmaster.ca/people/ruffle-bradley

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