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Empirical analysis of buyer power

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  • Walter Beckert

    (Institute for Fiscal Studies and Birkbeck, University of London)

Abstract

This paper provides a comprehensive econometric framework for the empirical analysis of buyer power. It encompasses the two main features of pricing schemes in business-to-business relationships: nonlinear price schedules and bargaining over rents. Disentangling them is critical to the empirical identification of buyer power. Testable predictions from the theoretical analysis are delineated, and a pragmatic empirical methodology is presented. It is readily implementable on the basis of transaction data, routinely collected by antitrust authorities. The empirical framework is illustrated using data from the UK brick industry. The paper emphasizes the importance of controlling for endogeneity of volumes and for heterogeneity across buyers and sellers.

Suggested Citation

  • Walter Beckert, 2009. "Empirical analysis of buyer power," CeMMAP working papers CWP17/09, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:cemmap:17/09
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    File URL: http://cemmap.ifs.org.uk/wps/cwp1709.pdf
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    References listed on IDEAS

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    1. William Boulding & Richard Staelin, 1990. "Environment, Market Share, and Market Power," Management Science, INFORMS, vol. 36(10), pages 1160-1177, October.
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    3. Tasneem Chipty & Christopher M. Snyder, 1999. "The Role Of Firm Size In Bilateral Bargaining: A Study Of The Cable Television Industry," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 326-340, May.
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    6. Sofia Berto Villas-Boas, 2007. "Vertical Relationships between Manufacturers and Retailers: Inference with Limited Data," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(2), pages 625-652.
    7. Christopher M. Snyder, 1996. "A Dynamic Theory of Countervailing Power," RAND Journal of Economics, The RAND Corporation, vol. 27(4), pages 747-769, Winter.
    8. Monica Giulietti, 2007. "Buyer and seller power in grocery retailing: evidence from Italy," Revista de Economía del Rosario, Universidad del Rosario, December.
    9. Smith, Howard & Thanassoulis, John, 2006. "Upstream Competition and Downstream Buyer Power," CEPR Discussion Papers 5803, C.E.P.R. Discussion Papers.
    10. von Ungern-Sternberg, Thomas, 1996. "Countervailing power revisited," International Journal of Industrial Organization, Elsevier, vol. 14(4), pages 507-519, June.
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    Cited by:

    1. Wesselbaum, Dennis, 2010. "Price bargaining, the persistence puzzle, and monetary policy," Kiel Working Papers 1629, Kiel Institute for the World Economy (IfW Kiel).

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