Faculty of Economics and Business Administration Publications Database

Leveraging Buyer Power

Volume: 25
Number: 5
Pages: 908 - 924
Month: October
ISSN-Print: 0167-7187
Link External Source: Online Version
Year: 2007
Keywords: Buyerpower; Retail concentration
Abstract: This paper analyzes the different channels through which the exercise of buyerpower can both trigger and accelerate further concentration in the downstream (or retail) industry. We show how the existence of size-related discounts creates higher incentives for those buyers that are already large to grow even further, either through acquisitions or through investing in a more competitive offering. In addition, larger buyers gain additional market share as their rivals'' purchasing terms deteriorate. We also investigate how, even though no firm exits the market, the growing concentration of the retail market can harm consumers.