search query: @indexterm PURCHASING POWER / total: 65
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Author: | Inderst, R. Shaffer, G. |
Title: | Retail mergers, buyer power and product variety |
Journal: | Economic Journal
2007 : JAN, VOL. 117:516, p. 45-67 |
Index terms: | retail industry mergers products purchasing power models |
Language: | eng |
Abstract: | In this article, the impact of retail mergers (hereafter as: mrg./mrgs.) on product variety (here as: p-v.) is analyzed. It is shown that after a mrg., a retailer (as: r-tr.) may want to enhance its buyer power by committing to a 'single-sourcing' purchasing strategy. Anticipating further industry concentration, suppliers will strategically choose to produce less differentiated products, further reducing p-v. In the case of efficient negotiations, the overall loss in p-v. may reduce consumer surplus and total welfare. However, with linear tariffs there may be a countervailing effect with the more powerful r-tr. passing on lower prices to final consumers. |
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