Author: | Mathewson, F. Winter, R. |
Title: | Buyer groups |
Journal: | International Journal of Industrial Organization
1997 : APR, VOL. 15:2, p. 137-164 |
Index terms: | MONOPOLY COMPETITION ORGANIZATIONS |
Language: | eng |
Abstract: | When does it pay a coalition of buyers and a coalition of sellers to by-pass a non-cooperative market outcome by negotiating an alternative contract? Should these collective contracts be allowed? This paper investigates one source of the incentive for collective contracting: the failure of monopolistically competitive markets to achieve the optimal trade-off between lower costs and greater variety or availability of products. A collective product benefits buyers inside the coalition but imposes a negative externality on buyers outside the coalition, who face higher prices and lower availability when the contract is allowed. |
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