Buyer Group and Buyer Power When Sellers Compete

Jeon, Doh-Shin and Menicucci, Domenico (2014) Buyer Group and Buyer Power When Sellers Compete. TSE Working Paper, n. 14-543, Toulouse

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We study how buyer group a¤ects buyer power when sellers compete with nonlinear tari¤s and buyers operate in separate markets. In the baseline model of two symmetric sellers and two symmetric buyers, we characterize the set of equilibria under buyer group, the set without buyer group and compare both. We find that the interval of each buyer's equilibrium payoffs without buyer group is a strict subset of the interval under buyer group if each seller's cost function is strictly convex, whereas the two intervals are identical if the cost function is concave. Our result implies that buyer group has no effect when the cost function is concave. When it is strictly convex, buyer group strictly reduces the buyers'payoff as long as, under buyer group, we select the Pareto-dominant equilibrium in terms of the sellers? payoffs. We extend this result to asymmetric settings with an arbitrary number of buyers.

Item Type: Monograph (Working Paper)
Language: English
Date: 26 November 2014
Place of Publication: Toulouse
Uncontrolled Keywords: Buyer Group, Buyer Power, Competition in Non-linear Tariffs, Discriminatory Offers, Common Agency
JEL codes: D4 - Market Structure and Pricing
K21 - Antitrust Law
L41 - Monopolization; Horizontal Anticompetitive Practices
L82 - Entertainment; Media (Performing Arts, Visual Arts, Broadcasting, Publishing, etc.)
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 16 Mar 2015 14:53
Last Modified: 21 Mar 2018 12:57

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