search query: @indexterm ECONOMETRIC MODELS / total: 1046
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| Author: | Inderst, R. Wey, C. |
| Title: | Countervailing power and dynamic efficiency |
| Journal: | Journal of the European Economic Association
2011 : AUG, VOL. 9:4, p. 702-720 |
| Index terms: | econometric models competition negotiation suppliers investment direct costing prices |
| Language: | eng |
| Abstract: | This paper examines the effect of buyer power on dynamic efficiency. A bargaining model is considered, in which buyer power arises endogenously from size and may affect a supplier's incentive to invest in lower marginal cost. We challenge the view often expressed in policy circles that the exercise of buyer power stifles suppliers' incentives. Instead, it is found that the presence of larger buyers keeps a supplier 'more on his toes' and inflicts him to improve the competitiveness of his offering, both price and quality, relative to the buyers' alternative options. |
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