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: Suggested Citation
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