Buyer Power and Supplier Incentives

This paper argues that - in contrast to an often expressed view - the formation of larger and more powerful buyers need not reduce welfare by stifling suppliers' incentives. If contracts are determined in bilateral negotiations, the presence of larger buyers may both increase suppliers' incentives for product improvement and induce suppliers to choose a more efficient technology. The paper also isolates two different channels by which larger buyers can obtain a discount.

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Year of publication:	2005
Authors:	Inderst, Roman ; Wey, Christian
Institutions:	DIW Berlin (Deutsches Institut für Wirtschaftsforschung)
Subject:	Buyer power \| Merger \| Retailing

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Extent:	application/pdf
Series:	Discussion Papers of DIW Berlin. - ISSN 1619-4535.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 464 27 pages long
Source:	RePEc - Research Papers in Economics