کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
983656 | 934044 | 2007 | 17 صفحه PDF | دانلود رایگان |
This paper analyses the sources of buyer power and the effect of buyer power on sellers’ investment in quality improvements. In our model, retailers make take-it-or-leave-it offers to a producer and each of them in equilibrium obtains its marginal contribution to total profits (gross of sunk costs). In turn, the individual marginal contribution depends on the rivalry between retailers in the bargaining process. Rivalry increases when retailers are less differentiated and when decreasing returns to scale in production are larger. The allocation of total surplus affects the incentives of the producer to invest in product quality, an instance of the hold-up problem. An increase in buyer power not only makes the supplier and consumers worse off, but it may even harm retailers that obtain a larger share of a smaller surplus.
Journal: Research in Economics - Volume 61, Issue 2, June 2007, Pages 45–61