IDEAS home Printed from https://ideas.repec.org/a/kap/regeco/v27y2005i3p263-280.html
   My bibliography  Save this article

Privately-Negotiated Input Prices

Author

Listed:
  • David Sappington
  • Burcin Unel

Abstract

We examine settings where input prices are negotiated by industry suppliers, rather than dictated by regulators. We find that the input buyer may agree to pay a high price for an input because the high price serves to reduce the intensity of retail price competition with the input seller. Full exploitation of retail customers can result. However, retail price regulation, competition among buyers, and product heterogeneity all can limit the extraction of consumer surplus. We also identify conditions under which input price negotiations will fail to produce a mutually agreeable input price. Copyright Springer Science+Business Media, Inc. 2005

Suggested Citation

  • David Sappington & Burcin Unel, 2005. "Privately-Negotiated Input Prices," Journal of Regulatory Economics, Springer, vol. 27(3), pages 263-280, January.
  • Handle: RePEc:kap:regeco:v:27:y:2005:i:3:p:263-280
    DOI: 10.1007/s11149-005-6624-5
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11149-005-6624-5
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1007/s11149-005-6624-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David E. M Sappington, 2005. "On the Irrelevance of Input Prices for Make-or-Buy Decisions," American Economic Review, American Economic Association, vol. 95(5), pages 1631-1638, December.
    2. Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anil Arya & Brian Mittendorf, 2018. "Endogenous timing when a vertically integrated producer supplies a rival," Journal of Regulatory Economics, Springer, vol. 54(2), pages 105-123, October.
    2. Saruta, Fuyuki, 2020. "Effects of Content Providers' Heterogeneity on Internet Service Providers' Zero-rating Choice," MPRA Paper 107505, University Library of Munich, Germany, revised May 2021.
    3. Sappington, David E.M., 2006. "On the design of input prices: Can TELRIC prices ever be optimal?," Information Economics and Policy, Elsevier, vol. 18(2), pages 197-215, June.
    4. William P. Rogerson, 2020. "Modelling and predicting the competitive effects of vertical mergers: The bargaining leverage over rivals effect," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(2), pages 407-436, May.
    5. Shana Cui & David E. M. Sappington, 2021. "Access pricing in network industries with mixed oligopoly," Journal of Regulatory Economics, Springer, vol. 59(3), pages 193-225, June.
    6. Doucet, Joseph & Littlechild, Stephen, 2006. "Negotiated settlements: The development of legal and economic thinking," Utilities Policy, Elsevier, vol. 14(4), pages 266-277, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Graeme Guthrie, 2006. "Regulating Infrastructure: The Impact on Risk and Investment," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 925-972, December.
    2. Mark Armstrong & David E.M. Sappington, 2006. "Regulation, Competition and Liberalization," Journal of Economic Literature, American Economic Association, vol. 44(2), pages 325-366, June.
    3. Kenneth Fjell & Øystein Foros & Debashis Pal, 2010. "Endogenous Average Cost Based Access Pricing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(2), pages 149-162, March.
    4. David Mandy, 2009. "Pricing inputs to induce efficient Make-or-Buy decisions," Journal of Regulatory Economics, Springer, vol. 36(1), pages 29-43, August.
    5. E. Villemeur & Helmuth Cremer & Bernard Roy & Joëlle Toledano, 2007. "Worksharing, access and bypass: the structure of prices in the postal sector," Journal of Regulatory Economics, Springer, vol. 32(1), pages 67-85, August.
    6. Bassanini, Anna & Pouyet, Jerome, 2005. "Strategic choice of financing systems in regulated and interconnected industries," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 233-259, February.
    7. Antonio Estache & Marco Manacorda & Tommaso M. Valletti, 2002. "Telecommunications Reform, Access Regulation, and Internet Adoption in Latin America," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 153-218, January.
    8. Harbord, David & Hoernig, Steffen, 2010. "Welfare Analysis of Regulating Mobile Termination Rates in the UK (with an Application to the Orange/T-Mobile Merger)," MPRA Paper 21515, University Library of Munich, Germany.
    9. Ruzana Davoyan & Jorn Altmann & Wolfgang Effelsberg, 2010. "A New Bilateral Arrangement between Interconnected Providers," TEMEP Discussion Papers 201044, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jan 2010.
    10. Kerry M. Tan, 2018. "Outsourcing and Price Competition: An Empirical Analysis of the Partnerships Between Legacy Carriers and Regional Airlines," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 53(2), pages 275-294, September.
    11. Francis Bloch & Axel Gautier, 2017. "Strategic bypass deterrence," Journal of Regulatory Economics, Springer, vol. 52(2), pages 189-210, October.
    12. Ángel L. López & Patrick Rey, 2009. "Foreclosing Competition through Access Charges and Price Discrimination," Working Papers 2009.99, Fondazione Eni Enrico Mattei.
    13. ?zlem Bedre-Defolie & Emilio Calvano, 2013. "Pricing Payment Cards," American Economic Journal: Microeconomics, American Economic Association, vol. 5(3), pages 206-231, August.
    14. Inderst, Roman & Peitz, Martin, 2011. "Netzzugang, Wettbewerb und Investitionen," ZEW Discussion Papers 11-025, ZEW - Leibniz Centre for European Economic Research.
    15. Ruzana Davoyan & Jorn Altmann, 2010. "Investigating the Role of a Transmission Initiator in Private Peering Arrangements," TEMEP Discussion Papers 201043, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jan 2010.
    16. repec:ebl:ecbull:v:12:y:2007:i:7:p:1-8 is not listed on IDEAS
    17. Christos Genakos & Tommaso Valletti, 2011. "Testing The “Waterbed” Effect In Mobile Telephony," Journal of the European Economic Association, European Economic Association, vol. 9(6), pages 1114-1142, December.
    18. Toshihiro Matsumura & Noriaki Matsushima, 2007. "On patent licensing in spatial competition with endogenous location choice," Discussion Papers 2007-35, Kobe University, Graduate School of Business Administration.
    19. Andreas Haller & Christian Jaag & Urs Trinkner, 2013. "Termination charges in the international parcel market," Chapters, in: Michael A. Crew & Paul R. Kleindorfer (ed.), Reforming the Postal Sector in the Face of Electronic Competition, chapter 19, pages 277-293, Edward Elgar Publishing.
    20. Giulia Canzian & Gianluca Mazzarella & Frank Verboven & Stefano Verzillo & Louis Ronchail, 2021. "Evaluating the Impact of Price Caps - Evidence from the European Roam-Like-at-Home Regulation," CESifo Working Paper Series 9303, CESifo.
    21. Toshihiro Matsumura & Noriaki Matsushima, 2009. "Access Charge, Vertical Separation, and Lobbying," Discussion Papers 2009-11, Kobe University, Graduate School of Business Administration.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:regeco:v:27:y:2005:i:3:p:263-280. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.