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Group bargaining in supply chains

Author

Listed:
  • D.J. Clark
  • Jean-Christophe Pereau

    (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)

Abstract

We consider a vertical supply chain in which a monopoly retailer produces a good by assembling a number of essential components each of which is owned by a monopoly. Rather than making the common assumption that the component price is set in the same way for each owner, we investigate the possibility that the retailer may profit by bargaining with some owners in a group, whilst others set their component price to maximize own profit. Furthermore, component owners can self-select into one of these groups, and the retailer can affect group formation by adjusting the order of negotiations. We present conditions under which the retailer can encourage the formation of a bargaining group, and thereby improve its own and industry profit. © 2021, The Author(s).

Suggested Citation

  • D.J. Clark & Jean-Christophe Pereau, 2021. "Group bargaining in supply chains," Post-Print hal-03432931, HAL.
    • Handle: RePEc:hal:journl:hal-03432931
    DOI: 10.1007/s10058-021-00244-9
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    References listed on IDEAS

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    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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