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The Countervailing Power Hypothesis when Dominant Retailers Function as Sales Promoters

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  • Noriaki Matsushima
  • Shohei Yoshida

Abstract

We consider a downstream oligopoly model with one dominant and several fringe retailers, who purchase a manufacturing product from a monopoly supplier. We then examine how the supplier's outside option influences the relation between the dominant retailer's bargaining power and the equilibrium retail price. If the market demand shrinks due to a breakdown of bargaining between the supplier and the dominant retailer, who works as a sales promoter for the product, there is a negative relation between the bargaining power and the retail price.

Suggested Citation

  • Noriaki Matsushima & Shohei Yoshida, 2016. "The Countervailing Power Hypothesis when Dominant Retailers Function as Sales Promoters," ISER Discussion Paper 0981r, Institute of Social and Economic Research, Osaka University, revised Jul 2017.
    • Handle: RePEc:dpr:wpaper:0981r
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    References listed on IDEAS

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    Cited by:

    1. Yuta Kittaka & Noriaki Matsushima & Fuyuki Saruta, 2021. "Competition between physical and electronic content retailers," ISER Discussion Paper 1123, Institute of Social and Economic Research, Osaka University.
    2. Shohei Yoshida, 2018. "Bargaining power and firm profits in asymmetric duopoly: an inverted-U relationship," Journal of Economics, Springer, vol. 124(2), pages 139-158, June.
    3. Qiu Zhao, 2019. "The Influence of Buyer Power on Supply Chain Pricing with Downstream Competition," Sustainability, MDPI, vol. 11(10), pages 1-19, May.
    4. Kittaka, Yuta & Matsushima, Noriaki & Saruta, Fuyuki, 2022. "Negative effect of price-matching policy on traditional retailers in a dual-channel supply chain with different content formats," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 161(C).
    5. Noriaki Matsushima & Shohei Yoshida, 2022. "The countervailing power hypothesis and contingent contracts," ISER Discussion Paper 1191, Institute of Social and Economic Research, Osaka University.

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