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Buyer Alliances in Vertically Related Markets

Abstract : Alliances of buyers to negotiate input prices with suppliers are commonplace. Using pre-and post-alliances data on household purchases of bottled water, I develop a structural model of bilateral oligopoly to estimate the effects of alliances formed by retailers on their bargaining power vis-à-vis manufacturers and retail prices paid by consumers. Results provide evidence of a countervailing buyer power effect that reduces retail prices by roughly 7%. Exploring determinants of buyer power, I find that changes in retailers' bargaining ability play an important role in the countervailing force exerted by buyer alliances which, absent this effect, would have harmed retailers.
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Contributor : Hugo Molina <>
Submitted on : Wednesday, October 7, 2020 - 12:26:57 PM
Last modification on : Saturday, May 8, 2021 - 3:25:25 AM


  • HAL Id : hal-02960040, version 1


Hugo Molina. Buyer Alliances in Vertically Related Markets. 2020. ⟨hal-02960040⟩



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