Waterson, Michael, 1950- and Dobson, Paul, 1962- (1998) The welfare consequences of the exercise of buyer power. [Report]

Preview

PDF WRAP_Waterson_oft239.pdf - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader Download (134Kb)

Abstract

This report considers the social welfare effects resulting from the exercise of buyer power - whereby a firm or group of firms obtain from suppliers more favourable terms than those available to other buyers or would otherwise be expected under normal competitive conditions. It seeks to synthesise and extend existing theory on monopsony and buyer power, so as to identify the conditions where detrimental effects are likely to dominate benign social welfare effects, and vice versa, with the aim of providing practical guidance to competition authorities seeking to develop appropriate responses to the presence of buyer power.

Item Type:	Report
Subjects:	H Social Sciences > HC Economic History and Conditions
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Competition policy -- Great Britain, Purchasing -- Great Britain, Retail trade -- Great Britain
Series Name:	Office of Fair Trading Research Paper
Publisher:	Office of Fair Trading
Place of Publication:	London
Date:	1998
Volume:	Vol.16
Number of Pages:	56
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Copyright Holders:	Crown copyright
References:	Adams, W. A. (1987), ‘Countervailing Power’, in The New Palgrave: A Dictionary of Economics, edited by J. Eatwell, M. Milgate, and P. Newman, 4 volumes, Macmillan: London. Aghion, P., and Bolton, P. (1987), ‘Contracts as a Barrier to Entry’, American Economic Review, Vol 77, pp 388-401. American Bar Association (1980), The Robinson-Patman Act: Policy and Law, Vol 1, Monograph No 4, Section of Antitrust Law. Atkinson, S. E., and Kerkvliet, J. (1989), ‘Dual Measures of Monopoly and Monopsony Power: An Application to Regulated Electric Utilities’, Review of Economics and Statistics, Vol 71, pp 250-257. Azoulay, R. A. (1995), ‘The Changing Face of UK Retailing, 1982-1992’, unpublished MA dissertation, University of Nottingham. Binmore, K., Rubinstein, A., and Wolinsky, A. (1986), ‘The Nash Bargaining Solution in Economic Modelling’, Rand Journal of Economics, Vol 17, pp 176-188. Blair, R. D., and Harrison, J. L. (1993), Monopsony - Antitrust Law and Economics, Princeton University Press. Blair, R. D., Kaserman, D. L., and Romano, R. E. (1989), ‘A Pedagogical Treatment of Bilateral Monopoly’, Southern Economic Journal, Vol 55, pp 831-841. Bowley, A. L. (1928), ‘Bilateral Monopoly’, Economic Journal, Vol 38, pp 651-659. Bradburd, R. M. (1982), ‘Price-Cost Margins in Producer Goods Industries and the Importance of Being Unimportant’, Review of Economics and Statistics, Vol 64, pp 405-412. Che, Y.-K., and Gale, I. (1997), ‘Buyer Alliances and Managed Competition’, Journal of Economics and Management Strategy, Vol 6, pp 175-200. Chipty, T. (1995), ‘Horizontal Integration for Bargaining Power: Evidence from the Cable Television Industry’, Journal of Economics and Management Strategy, Vol 4, pp 375-397. Clarke, R. (1993), ‘Trends in Concentration in UK Manufacturing, 1980-1989’, in Industrial Concentration and Economic Inequality, edited by M. Casson, and J. Creed, Elgar: Aldershot. Clarke, R., and Davies, S. W. (1982), ‘Market Structure and Price-Cost Margins’, Economica, Vol 49, pp 277-287. Coleman, A. W. (1997), ‘National Brands, Private Labels and Unfair Competition - When Imitation Goes Beyond the Sincerest Form of Flattery’, The Trademark Reporter, Vol 87, January-February, No 1, pp 79-111. Connor, J. M. , Rogers, R., and Bhagavan, V. (1996), ‘Concentration and Countervailing Power in the US Food Manufacturing Industries’, Review of Industrial Organization, Vol 11, pp 473-492. Dixit, A., and Pindyck, R. (1994), Investment Under Uncertainty, Princeton University Press: Princeton Dobson, P. W. (1990), Horizontal and Vertical Market Structures, unpublished PhD dissertation, University of London. Dobson, P. W. (1994), ‘Multifirm Unions and the Incentive to Adopt Pattern Bargaining in Oligopoly’, European Economic Review, Vol 38, pp 87-100. Dobson, P. W. (1998a), ‘The Economic Welfare Implications of Own Label Products’, School of Management and Finance Discussion Paper 1998 IV, University of Nottingham. Dobson, P. W. (1998b), ‘The Competition Effects of Look-alike Products’, School of Management and Finance Discussion Paper 1998 VI, University of Nottingham. Dobson, P. W., and Waterson, M. (1996a), Vertical Restraints and Competition Policy, Research Paper 12, Office of Fair Trading, London. Dobson, P. W., and Waterson, M. (1996b), ‘The Public Policy Implications of Increasing Retailer Power’, School of Management and Finance Discussion Paper 1996 VII, University of Nottingham. Dobson, P. W., and Waterson, M. (1997), ‘Countervailing Power and Consumer Prices’, Economic Journal, Vol 107, pp 418-430. Farris, P. W., and Ailawadi, K. L. (1992), ‘Retail Power: Monster or Mouse?’, Journal of Retailing, Vol 68, pp 351-369. Fellner, W. (1949), Competition Among the Few, Knopf: New York. Forchheimer, K. (1908), ‘Theoretisches zum unvollstandigen Monopole’, Schmollers Jahrbuch, pp 1-12. Friedman, J. (1987), ‘Bilateral Monopoly’, in The New Palgrave: A Dictionary of Economics, edited by J. Eatwell, M. Milgate, and P. Newman, 4 volumes, Macmillan: London. FTC (1997), ‘FTC Judge Upholds Charges Against Toys‘R’Us’, FTC Press Release (FTC File No 9410 0040; Docket No 9278) Galbraith, J. K. (1952), American Capitalism: The Concept of Countervailing Power, Houghton Mifflin: New York. Guth, L. A., Schwartz, R. A., and Whitcombe, D. K. (1977), ‘Buyer Concentration Ratios’, Journal of Industrial Economics, Vol 25, pp 241-251. Horn, H., and Wolinsky, A. (1988), ‘Bilateral Monopolies and Incentives for Merger’, Rand Journal of Economics, Vol 19, pp 408-419. Hubbard, R G, and Weiner, R J (1991), ‘Efficient Contracting and Market Power: Evidence from the U S Natural Gas Industry’, Journal of Law and Economics, Vol 34, pp 25-67. Hunter, A. (1958), ‘Notes on Countervailing Power’, Economic Journal, Vol 68, pp 89-103. Jacobson, J. M., and Dorman, G. J. (1991), ‘Joint Purchasing, Monopsony and Antitrust’, Antitrust Bulletin, Vol 36, pp 1-79. Jacobson, J. M., and Dorman, G. J. (1992), ‘Monopsony Revisited: A Comment of Blair and Harrison’, Antitrust Bulletin, Vol 37, pp 151-170. Jones, J. C. H., and Walsh, W. D. (1988), ‘Salary Determination in the National Hockey League: The Effects of Skills, Franchise Characteristics, and Discrimination’, Industrial and Labor Relations Review, Vol 41, pp 592-604. Just, R. E., and Chern, W. S .(1980), ‘Tomatoes, Technology, and Oligopsony’, Bell Journal of Economics, Vol 11, pp 584-602. Kerkvliet, J. (1991), ‘Efficiency and Vertical Integration: The Case of Mine-Mouth Electric Generating Plants’, Journal of Industrial Economics, Vol 39, pp 467-482. Kesselring, R. G. (1991), ‘The Economics of Faculty Unions’, Journal of Labor Research, Vol 12, pp 61-72. Lehn, K. (1982), ‘Property Rights, Risk Sharing and Player Disability in Major League Baseball’, Journal of Law and Economics, Vol 25. London Economics (1997), Competition in Retailing, Research Paper 13, Office of Fair Trading, London. Lopez, R., and You, Z. (1993), ‘Determinants of Oligopsony Power: The Haitian Coffee Case’, Journal of Development Economics, Vol 41, pp 275-284. Lustgarten, S. H. (1975), ‘The Impact of Buyer Concentration in Manufacturing Industries’, Review of Economics and Statistics, Vol 47, pp 125-132. Martin, S. (1983), ‘Vertical Relationships and Industrial Performance’, Quarterly Review of Economics and Business, Vol 23, pp 6-18. Martin, S. (1986), ‘Causes and Effects of Vertical Integration’, Applied Economics, Vol 18, pp 737-755. Martin, S. (1994), Industrial Economics (2nd Edition), Macmillan: Basingstoke. Mathewson, G. F., and Winter, R. A. (1987), ‘The Competitive Effects of Vertical Agreements: Comment’, American Economic Review, Vol 77, pp 1057-1068. Mathewson, G. F., and Winter, R. A. (1996), ‘Buyer Groups’, International Journal of Industrial Organization, Vol 15, pp 137-164. McGucken, R., and Chen, H. (1976) ‘Interactions Between Buyer and Seller Concentration and Industry Price-Cost Margins’, Industrial Organization Review, Vol 4, pp 123-133. McKenzie, R. B., and Sullivan, E. T. (1987), ‘Does the NCAA Exploit College Athletes? An Economics and Legal Reinterpretation’, Antitrust Bulletin, Vol 32, pp 373-399. Milgrom, P., and Roberts, J. (1990), ‘New Theories of Predatory Pricing’, in Industrial Structure in the New Industrial Economics, edited by G. Bonanno and D. Brandolini, OUP: Oxford. MMC (1981), Discounts to Retailers, HMSO: London Morgan, J. N. (1949), ‘Bilateral Monopoly and the Competitive Output’, Quarterly Journal of Economics, Vol 63, pp 371-391. Nash, J. (1950), ‘The Bargaining Problem’, Econometrica, Vol 18, pp 155-162. NERA (1993), Market Definition in UK Competition Policy, Research Paper 1, Office of Fair Trading, London. Newmark, C. M. (1989), ‘Administrative Control, Buyer Concentration, and Price-Cost Margins’, Review of Economics and Statistics, Vol 71, pp 74-79. Nichol, A. J. (1943), ‘Review of A Theoretical Analysis of Imperfect Competition with Special Application to the Agricultural Industries by W H Nicholls’, Journal of Political Economy, Vol 51, pp 82-84. Nordemann, J. B. (1995), ‘Buying Power and Sophisticated Buyers in Merger Control Law: The Need for a More Sophisticated Approach’, European Competition Law Review, No 5, pp 270-281. OECD (1981), Buying Power: The Exercise of Market Power by Dominant Buyers, Report of the Committee of Experts on Restrictive Business Practices, OECD, Paris. OFT (1985), Competition and Retailing, Office of Fair Trading, London. OFT (1995), Buyer Power of Large Distribution Groups, Office of Fair Trading, London. Pauly, M. V. (1987), ‘Monopsony Power in Health Insurance: Thinking Straight While Standing on Your Head’, Journal of Health Economics, Vol 6, pp 73-81. Pauly, M. V. (1988), ‘Market Power, Monopsony, and Health Insurance Markets’, Journal of Health Economics, Vol 7, pp 111-128. Pepall, L. M., and Shapiro, D. M. (1991), ‘The Profitability of Canadian Defence Contractors’, International Journal of Industrial Organization, Vol 9, pp 425-440. Ransom, M. R. (1993), ‘Seniority and Monopsony in the Academic Labor Market’, American Economic Review, Vol 83, pp 221-233. Rasmusen, E. B., Ramseyer, J. M., and Wiley, J. S. (1991), ‘Naked Exclusion’, American Economic Review, Vol 81, pp 1137-1145. Register, C. A. (1986), ‘Nurses’ Earnings, Monopsony, Compensating Differentials, and Comparable Worth, Atlantic Economic Journal, Vol 14 (3) Robinson, J. C. (1988), ‘Market Structure, Employment, and Skill Mix in the Hospital Industry’, Southern Economic Journal, Vol 55, pp 315-325. Rubinstein, A. (1982), ‘Perfect Equilibrium in a Bargaining Model’, Econometrica, Vol 50, pp 97-109. Saving, T. R. (1970), ‘Concentration Ratios and the Degree of Monopoly’, International Economic Review, Vol 11, pp 139-146. Schroeter, J. R., and Azzam, A. (1990), ‘Measuring Market Power in Multi-Product Oligopolies: The US Meat Industry’, Applied Economics, Vol 22, pp 1365-1376. Schroeter, J. R., and Azzam, A. (1991), ‘Marketing Margins, Market Power, and Price Uncertainty’, American Journal of Agricultural Economics, Vol 73, pp 990-999. Schumacher, U. (1991), ‘Buyer Structure and Seller Performance in US Manufacturing Industries’, Review of Economics and Statistics, Vol 73, pp 277-284. Segal, I., and Whinston, M. (1996), ‘Naked Exclusion and Buyer Coordination’, Harvard Institute of Economic Research Discussion Paper No 1780. Shaffer, G. (1991), ‘Slotting Allowances and Resale Price Maintenance: A Comparison of Facilitating Practices’, Rand Journal of Economics, Vol 22, pp 120-135. Shea, J. (1993), ‘Do Supply Curves Slope Up?’, Quarterly Journal of Economics, Vol 108, pp 1-32. Snyder, C. M. (1996), ‘A Dynamic Theory of Countervailing Power’, Rand Journal of Economics, Vol 27, pp 747-769. Stackelberg, H. von (1934), Marktform und Gleichgewicht, Julius Springer: Berlin. Staten, M., Umbeck, J., and Dunkelberg, W. (1987), ‘Market Share and the Illusion of Power: Can Blue Cross Force Hospitals to Discount?’, Journal of Health Economics, Vol 6, pp 43-58. Staten, M., Umbeck, J., and Dunkelberg, W. (1988), ‘Market Share/Market Power Revisited: A New Test for an Old Theory’, Journal of Health Economics, Vol 7, pp 73-87. Steiner, R. L. (1997), ‘How Manufacturers Deal with the Price-cutting Retailer: When are Vertical Restraints Efficient’, Antitrust Law Journal, Vol 65, pp 407-448. Stigler, G. (1954), ‘The Economist Plays with Blocs’, American Economic Review, Papers and Proceedings, Vol 44, pp 432-449. Sullivan, D. (1989), ‘Monopsony Power in the Market for Nurses’, Journal of Law and Economics, Vol 32, pp S135-S178. Tordjman, A. (1994), ‘European Retailing: Convergence, Differences and Perspectives’, International Journal of Retail and Distribution Management, Vol 22, No 5, pp 3-19. Ungern-Sternberg, T. von (1996), ‘Countervailing power revisited’, International Journal of Industrial Organization, Vol 14, pp 507-519. Veendorp, E. C. H. (1987), ‘Oligoemporistic Competition and the Countervailing Power Hypothesis’, Canadian Journal of Economics, Vol 20, pp 519-526. Vogel, L. (1997), ‘Competition Law and Buying Power: The Case for a New Approach in Europe’, mimeo, Department of Law, University of Paris (Pantheon-Assas) Walters, S. J. K. (1986), ‘Reciprocity Reexamined: The Consolidated Foods Case’, Journal of Law and Economics, Vol 29, pp 423-438. Waterson, M. (1980), ‘Price-Cost Margins and Successive Mark-Ups’, Quarterly Journal of Economics, Vol 94, pp 135-150. Williamson, O. E. (1968), ‘Economics as an Antitrust Defense: The Welfare Tradeoffs’, American Economic Review, Vol 58, pp 18-36.
URI:	http://wrap.warwick.ac.uk/id/eprint/21

Request changes to a record

Actions (login required)

View Item