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| Chris Doyle |
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| ''Small buyers'' |
| ( 2011, Vol. 31 No.1 ) |
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| We develop a model of retail competition and negotiations with an upstream supplier for several firms of different sizes. Contrary to existing thinking, we demonstrate that the larger a buyer the less countervailing power he possesses over the supplier. The reason for this is that a buyer's outside option - the ability to integrate backwards - becomes proportionately weaker as he grows in size as self-production is characterised by diseconomies of scale. |
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| Keywords: Buyer power, countervailing power |
JEL: L4 - Antitrust Issues and Policies: General
L1 - Market Structure, Firm Strategy, and Market Performance: General |
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| Manuscript Received : Jan 02 2011 | | Manuscript Accepted : Feb 03 2011 |
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