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Administrative Control, Buyer Concentration, and Price-Cost Margins

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  • Newmark, Craig M

Abstract

Steven H. Lustgarten (1975) and others have presented evidence that concentrated buyers lower the price-cost margins of sellers, but theory predicts that buyer concentration is positively correlated with administrative control of transactions. This paper shows that administrative control is responsible for the observed effect of buyer concentration. When a proxy for administrative control is included in Lustgarten's model, buyer concentration becomes insignificant. Copyright 1989 by MIT Press.

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  • Newmark, Craig M, 1989. "Administrative Control, Buyer Concentration, and Price-Cost Margins," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 74-79, February.
    • Handle: RePEc:tpr:restat:v:71:y:1989:i:1:p:74-79
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    Cited by:

    1. Irvine, Paul & Park, Shawn Saeyeul & Yildizhan, Celim, 2013. "Customer-base concentration, profitability and distress across the corporate life cycle," MPRA Paper 58435, University Library of Munich, Germany.

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