buyer power with atomistic upstream entry can downstream consolidation increase production and welfare abstract this paper investigates the effects of buyer power on entry into an atomistic upstream market and economic welfare under reasonable market conditions we show that industries with a few buyers induce more upstream entry than industries with a larger number of firms in particular monopsony can be more conducive to entry and lead to higher social welfare than more fragmented industry structures this seeming paradox arises because a single buyer better internalizes the positive effects of entry on later periods supply conditions than a collection of firms this result is relevant in a number of market settings including markets for specialized labor and processing markets for agricultural products

downstream merger and welfare in a bilateral oligopoly i analyse the effects of a downstream merger in a differentiated oligopoly when there is bargaining between downstream firms and upstream agents firms or unions bargaining outcomes can be observable or unobservable by rivals when competition is in quantities upstream agents are independent and bargaining is over a uniform input price a merger between downstream firms may raise consumer surplus and overall welfare however when competition is in prices or the upstream agents are not independent or bargaining is over a two part tariff or bargaining covers both the input price and the level of output the standard welfare results are restored a downstream merger always reduces consumer surplus and overall welfare

the economic theory of clubs some clarifications abstract we provide a classification of club models and relate differences in implications to differences in assumptions then we address two main controversies one concerning the optimality of market provisions of public goods and their optimality and the other concerning the desirability of segregation

should congestion tolls be set by the government or by the private sector the knight pigou debate revisited this paper clarifies issues debated by a c pigou and frank knight about correcting inefficient use of congestible resources focusing for concreteness on their original example of road congestion instead of government imposed pigouvian access fees knight favoured access fees set by private toll setters we consider the case of n 2 congestible roads and an uncongestible road of arbitrary speed knight argued that in the case of a single congestible road a private toll setter would always choose the toll that pigou recommended hence the allocation would minimize aggregate commute time without government meddling we find instead that two or more toll setters would never choose pigouvian tolls except in the special case of a sufficiently fast uncongestible road moreover for uncongestible roads of slower speed the allocation of motorists under knight s proposal is almost never efficient whenever it is inefficient motorists are strictly worse off when they pay tolls set by private firms instead of paying government imposed tolls and aggregate toll revenue is also lower nevertheless if the private sector does set tolls then the full cost to motorists can be limited if the government provides an uncongestible alternative such as a train to offer potential competition along the same route

vertical control opportunism and risk sharing abstract a manufacturer who offers secret contracts faces an opportunism problem she undercuts her own input prices and fails to offset retail competition i show that this problem diminishes when retailers are risk averse and face demand uncertainty risk aversion and uncertainty create a bilateral risk sharing incentive that raises equilibrium input prices above marginal cost the manufacturer can therefore profit from downstream risk aversion when retail competition is fierce

multifirm unions and the incentive to adopt pattern bargaining in oligopoly abstract this paper develops a model of wage bargaining between an industry wide trade union and firms in an oligopoly and considers the circumstances under which the union prefers pattern bargaining that is negotiating contracts in a sequential manner to simultaneous bargaining with the firms the paper goes on to consider the importance of the bargaining order in pattern bargaining when the firms are asymmetric the analysis shows that the union gains by first targeting a firm which is in a relatively weak bargaining position i e impatient to settle or a firm with relatively large profits

manufacturers and retailers in the global economy we develop a general equilibrium model to capture key features of the retailing and of the manufacturing industry in order to understand how these two industries interact and how labor is allocated between them we show that the observed shift in employment from manufacturing to retailing the rise in retailer product assortment and the emergence of slotting allowances in many retail markets are consistent with the global integration of product markets while higher retail market concentration is best explained by technological change in retailing we also identify a novel benefit from market integration consisting of efficiency gains in the vertical distribution chain

a framework to analyze the performance of thinly traded agricultural commodity markets thinly traded agricultural commodity markets are a concern for farmers and policy markers due to the belief that prices in these settings will be highly volatile subject to manipulation and incapable of efficiently allocating resources analysis of thin agricultural markets has to date been impeded by lack of an appropriate analytical framework from which to study their behavior in this paper we propose the modern agricultural markets mam framework as an appropriate paradigm through which to view and evaluate thin markets we argue that thinly traded markets that meet key conditions required for a mam will generate maximum economic surplus and enable farmers to earn at least a competitive return on their investments in the absence of these conditions however the concerns known as the thin market problem have validity we set forth the mam framework interpret it in a thin market context and conduct several brief case studies of thin markets to illustrate use of the approach and draw some key inferences about these markets behavior the analysis indicates that appropriate government policies directed to thin markets are those that facilitate their convergence to mam status but in reality key policies under recent consideration would have the opposite effect

the nash bargaining solution is optimal abstract we consider the problem faced by players in a two person bargaining game who have different opinions about what is the appropriate solution concept to use a procedure is proposed to resolve such a conflict and it is shown that the nash bargaining solution constitutes the unique equilibrium of the game induced by the procedure as a by product we obtain that in the axiomatic characterization of the nash solution the controversial independence of irrelevant alternatives axiom can be replaced by a much weaker recursivity axiom which amounts to requiring independence of alternatives that cannot be obtained as an outcome of a risk sensitive solution

nash equilibrium existence and uniqueness in a club model abstract we model a single club heterogeneous consumer exogeneous income economy as an aggregative public good game under common assumptions if club quality functions are homogeneous of positive degree in the club facility investment and use an unique nash equilibrium exists

countervailing power revisited abstract the paper uses the nash bargaining concept to study the predictions of the theory of countervailing power within two theoretical models a cournot model and a model of perfect competition within the cournot model a decrease in the number of retailers unambiguously leads to an increase in equilibrium consumer prices in the model of perfect competition the reverse is true one may thus conclude that countervailing power can have positive effects for the consumers only if competiton at the retail level is very fierce

exclusion and the theory of clubs this paper examines the competitive provision of club goods with costly exclusion we consider two exclusion regimes fine and coarse with fine exclusion a provider can charge both a membership fee and a per use price with coarse exclusion a provider can charge a membership fee only we show that competitive club good providers choose both the efficient exclusion regime which depends on the costs of exclusion and the associated efficient resource allocation thus with costly exclusion the competitive provision of club goods is constrained pareto efficient

co determination and innovation this paper examines the effect of the german co determination law of 1976 mitbestg on the innovative activity of german firms co determination applies to firms with 2 000 employees or more data from 1971 1976 and 1981 1990 on 148 firms are used to compare the number of patents granted to co determined firms before and after the introduction of the law several control variables are applied and in particular in order to avoid a possible bias from specific effects of firm size we compare the co determined firms with others before and after 1976 the results do not support the view that co determination slows down technological progress and reduces innovativity

the codetermined firm in oligopoly abstract a simple duopoly model is considered where firm owners bargain with employees representatives about employment but not about wages as is the case for codetermined firms in germany it turns out that for some range of the bargaining power a prisoner s dilemma exists bargaining is the dominant strategy although joint profits would be maximized with unrestricted profit maximization

industry profits and competition under bilateral oligopoly abstract we show that contrary to the key result of the standard cournot nash oligopoly model industry profits can increase with the number of firms if input prices are not exogenous but are determined by bargaining in bilateral oligopoly

urban economic growth in china theory and evidence this paper analyses the relationship between per capita gdp growth and investment foreign direct investment labour force growth government expenditure and urban infrastructure based on the data

hedonic regressions mis specification and neural networks there is an emerging literature in the field of hedonic regressions which successfully applies flexible functional forms in contrast numerous authors report hedonic regressions with relatively simple functions often with little or no attempt to consider interaction terms and higher level powers such simple functions perform relatively well in spite of good a priori grounds for quite complex interaction effects indeed the studies are characterised by a general indifference to testing these more flexible models even when degrees of freedom permit using detailed scanner data hedonic functions for the uk tv market are estimated and tested for interaction effects for a case study of the market higher level interaction effects are tested for and compare the results with those from a neural network with its property of universal approximation the use of neural networks is particularly novel in this context and some general findings on their suitability emerge

james m buchanan s contributions to economics this survey of james m buchanan s contributions to economics is divided into eig ht main categories the influence of knut wicksell and the pure theory of govern ment finance the italian tradition and the burden of national debt the calculu s of consent application of the public choice approach application to public f inance public goods and clubs fiscal constitutions and the reason of rules a bibliography of buchanan s publications 1949 to 1986 concludes the survey copyright 1987 by the editors of the scandinavian journal of economics

the market provision of club goods in the presence of scale economies a natural club monopoly exists when economies of scale are so significant relative to population size that in the efficient allocation the entire population is included in a single club under these circumstances an uncontested monopolist will inefficiently exclude some individuals from the club if marginal congestion costs are sufficiently high when the entire population is included if admitting that the entire population is profit maximizing then the facility size chosen is also efficient a perfectly contestable monopoly is always efficient external economies of scale exist when the cost of each facility declines as more facilities are provided this externality leads a competitive market to provide too few clubs but a monopolist will provide an efficient allocation because it internalizes the cost externality copyright 1990 by the london school of economics and political science

vertical integration and vertical restraints this paper surveys the field of vertical integration and vertical restraints with particular reference to implications for competition policy it outlines the existing legal framework then discusses some particular u k examples involving vertical restraints the theoretical discussion includes analyses of technological economies transactions costs contractual rights monopoly effects verticle restraints as externalities interbrand versus intrabrand competition the strategic effects of vertical separation and agency issues some policy implications are drawn amongst these being the points that vertical linkages can have strong anticompetitive effects that there is little support for separate treatment of resale price maintenance that policy should focus on economic effects rather than legal form that the case for the block exemption of franchising in the ec is unclear and that the law has failed to take the implications of the vertical separation literature into account copyright 1993 by oxford university press

divesting ownership in a rival we examine the consumer welfare effect of a firm s partial ownership of a competitor and compare the implications of alternative forms of divestiture we identify conditions under which turning voting shares into non voting shares is preferable to selling the shares to the firm s current shareholders an option frequently chosen we also show that selling the voting shares to a large independent shareholder is preferable to selling them to small shareholders we provide additional theoretical results and apply them to the divestiture of portugal telecom s holdings in ptm

on the welfare effects of vertical integration opportunism vs double marginalization abstract we investigate the welfare effects of vertical integration by an upstream supplier dealing with two downstream firms through secret linear tariffs we show that whether vertical integration is anti or procompetitive depends on the distribution of the bargaining power between firms in the pre integration case in particular when the supplier has all or at least higher bargaining power than downstream firms vertical integration is socially desirable on the contrary when downstream firms have all or at least higher bargaining power than the supplier integration is detrimental to society

do slotting allowances harm retail competition slotting allowances are fees paid by manufacturers to get access to retailers shelf space both in the usa and europe the use of slotting allowances has attracted attention in the general press as well as among policy makers and economists one school of thought claims that slotting allowances are efficiency enhancing while another school of thought maintains that slotting allowances are used in an anti competitive manner in this paper we argue that this controversy is partially caused by inadequate assumptions of how the retail market is structured and organized using a formal model we show that there are good reasons to expect anti competitive effects of slotting allowances we further point out that competi tion authorities tend to use an unsatisfactory basis for comparison when analyzing welfare consequences of slotting allowances

price discrimination and bargaining empirical evidence from medical devices many important issues in business to business markets involve price discrimination and negotiated prices situations where theoretical predictions are ambiguous this paper uses new panel data on buyer supplier transfers and a structural model to empirically analyze bargaining and price discrimination in a medical device market while many phenomena that restrict price discrimination are suggested as ways to decrease hospital costs e g mergers group purchasing organizations and transparency i find that 1 non discriminatory pricing actually works against hospitals because competition is more intense under price discrimination and 2 results depend ultimately on a previously unexplored bargaining effect

a larger slice or a larger pie an empirical investigation of bargaining power in the distribution channel this research aims to provide insights into the determinants of channel profitability and the relative power in the channel by considering consumer demand and the interactions between manufacturers and retailers in an equilibrium model we use the nash bargaining solution to determine wholesale prices and thus how margins are split in the channel equilibrium margins are a function of demand primitives and of retailer and manufacturer bargaining power bargaining power is itself a function of exogenous retail and manufacturer characteristics the parties bargaining positions are determined endogenously from the estimated substitution patterns on the demand side the more they have to lose in a negotiation relative to an outside option the weaker the bargaining position we use the proposed bargaining model to investigate the role of the three main factors that have been blamed for the power shift from manufacturers to retailers in recent years firm size increases store brand introductions and service level differentiation in our empirical analysis of the german market for coffee we find that bargaining power varies among the different manufacturer retailer pairs this result suggests that bargaining power is not an inherent characteristic of a firm but rather depends on the negotiation partner we are able to confirm empirically previous theoretical findings that there can be cases where the slice of the pie that goes to one of the channel members may decrease but the overall pie increases and compensates for the smaller share of profits

mergers when prices are negotiated evidence from the hospital industry in recent years many hospitals have merged in part to gain bargaining leverage with managed care organizations mcos we investigate the price impact of hospital mergers by formulating and estimating an equilibrium bargaining model between hospital systems and managed care health insurers over prices for inpatient services we estimate the parameters of the model using claims and discharge data from northern virginia in 2006 inova health system proposed to acquire prince william hospital we nd that this merger would have raised prices signicantly and that the remedy of separate bargaining imposed by the ftc in a separate hospital case would have resulted in a larger price increase

clubs local public goods and transportation models a synthesis abstract clubs local public goods and transportation models are analyzed within a unified model the emphasis is on the derivation of optimal allocation pricing and the size of the sharing group we derive the conditions under which optimal prices will yield surplus or deficit as well as those under which competitive provision will be efficient given heterogeneous tastes we prove that segregation according to tastes is generally efficient although several cases where this result does not hold are also discussed we show that the existing literature is unnecessarily restrictive and that the unified approach suggested here considerably extends the existing analysis of clubs local public goods and the transportation problems

buyers miscoordination entry and downstream competition this article shows that buyers coordination failures might prevent entry in an industry with an incumbent firm and a more efficient potential entrant if there were a single buyer or if all buyers formed a central purchasing agency coordination failures would be avoided and efficient entry would always occur more generally exclusion is less likely the lower the number of buyers for any given number of buyers exclusion is less likely the more fiercely buyers compete in the downstream market first intense competition may prevent miscoordination equilibria from arising second in cases where miscoordination equilibria still exist it lowers the maximum price that the incumbent can sustain at such exclusionary equilibria buyers have experienced increased concentration in many sectors in particular grocery retailing 1 2 this trend has triggered a wide debate on the effects of buyer power 3 we contribute to this debate by studying how concentration and competition among buyers affect the possibility of entry by a new upstream supplier in an industry characterised by scale economies in our model buyers fragmentation may lead to a situation where a new upstream firm does not manage to enter a market although endowed with lower marginal costs than an incumbent firm when several buyers decide independently from which supplier to purchase miscoordination equilibria may arise where all buyers buy from the incumbent even if the entrant sets a lower price if all buyers address the incumbent none of them has an incentive to deviate that is to switch to the entrant anticipating that a single order would not allow the

bilateral oligopoly the efficiency of intermediate goods markets abstract we show that intermediate goods markets may be efficient despite the presence of commonly accepted signs of market failure such as high concentration both among sellers and buyers sparse trading networks price dispersion and externalities the results are derived in an extensive form model of bilateral bargaining with multiple buyers and multiple sellers and with externalities between the negotiations we also characterize the structure of the endogenous trading network i e how firms choose trading partners prices are dispersed and depend on both the concentration of capital and the concentration of sales consistent with some stylized facts on buyer power

bilateral monopolies and incentives for merger the paper presents a model of duopoly in which firms acquire inputs through bilateral monopoly relations with suppliers it combines a bargaining model with a duopoly model to examine how input pri

competition through commissions and kickbacks in markets for retail financial products and health services consumers often rely on the advice of intermediaries to decide which specialized offering best fits their needs product providers in turn compete to influence the intermediaries advice through hidden kickbacks or disclosed commissions motivated by the controversial role of these widespread practices we formulate a model to analyze competition through commissions from a positive and normative standpoint the model highlights the role of commissions in making the advisor responsive to supply side incentives we characterize situations when commonly adopted policies such as mandatory disclosure and caps on commissions have unintended welfare consequences jel d21 d82 d83 g21 l15 l25

endogenous fertility and the henry george theorem abstract models of endogenous demographic change deal with population size as an additional object of the welfare analysis in these models the overlapping generations olg model serves as the basic framework in club theory too population size is treated as an endogenous variable in local public goods lpg models the so called henry george theorem which requires local public expenditures to be financed by a 100 tax on aggregate land rent is known as a first order condition for club efficiency the present paper establishes and exploits an isomorphism between steady states of the olg model and allocations of the lpg model the paper revisits samuelson s fallacy concerning his goldenest golden rule and it explores institutional arrangements that sustain the optimum growth of population

pass through vertical contracts and bargains abstract this paper analyzes the determinants of pass through that are specific to vertical relationships between wholesalers and retailers the type of vertical agreement firms contract upon as well as their relative bargaining power are identified as major determinants of pass through rates

the system of administrative and political corruption canal irrigation in south india the paper describes how some irrigation engineers raise vast amounts of illicit revenue from the distribution of water and contracts and redistribute part to superior officers and politicians it argues that the corruption system which is centred on control of personnel transfers is an important supply side reason for poor performance of canal irrigated agriculture insofar as the same system operates in other government departments it may be more important for understanding indian politics and the political influences on economic development than has previously been realised

the nash bargaining solution in vertical relations with linear input prices abstract we re examine the nash bargaining solution when an upstream and n downstream firms bargain over a linear input price with unobservable contracts we show that the profit sharing rule is given by a simple and instructive formula which depends on the parties disagreement payoffs the profit weights in the nash product and the elasticity of derived demand a downstream firm s profit share increases in the equilibrium derived demand elasticity which in turn depends on the final goods demand elasticity

urban governance competition and welfare the market mechanism of spatial resource allocation is examined in a system of cities where social welfare depends on city size the competitive dynamics of the system is a product of the interplay between people s individual exit type choices migration and their collective voice type choices urban governance it is shown that the use of efficiency enhancing measures of urban governance depends on the pressure of exit a necessary condition for dynamic efficiency is that the market equilibrium of migration is non stable which sounds somewhat paradoxical dynamic efficiency is more likely to emerge between initially small cities in which agglomeration economies dominate than between initially large cities in which agglomeration diseconomies dominate the incentives for proper urban governance are somewhat ambiguous in the most relevant case where cities are of asymmetrical size it is therefore important to strengthen the incentives by means of national urban policy

bargaining power fear of disagreement and wage settlements theory and evidence from u s industry the paper develops and estimates a theoretical model of wage determination and union nonunion wage differentials in order to overcome the institutional ctiticisms of the formal bargaining literature the paper generalizes the nash zeuthen harsanyi model by linking the solution to the institutional concepts of bargaining power and fear or cost of disagreement and by making the outcome depend not only on endogenous but also on exogenous factors an operational specification of bargaining power and fear of disagreement allows the model to be estimated with data covering twelve companies and trade unions during the period from mid 1950 s to the late 1970 s while giving limited support to the nashzeuthen harsanyi solution the empirical analysis indicates that the bargaining outcome usually deviates from the nash zeuthen harsanyi point and in accordance with the institutionalist claim that it varies significantly with exogenous factors contrary to the traditional labor economics view the results do not support the general conclusion that the bargaining solution lies on the marginal revenue product curve of labor instead the relevant coefficients suggest that for many firms and unions the outcome might be better characterized by the efficient contract vertical contract curve

endogenous scope of firm union bargaining with vertical pay comparisons abstract there is strong evidence that employees motivation and incentives in the workplace are affected by vertical pay comparisons in a stylized cournot duopoly model with firm specific unions that institutionalize workers vertical fairness concerns we show that universal wage employment w e bargaining may arise as the equilibrium scope of bargaining institution we thus propose that intra firm vertical fairness concerns may resolve the mismatch between recent findings in the empirical literature on labor market institutions and the predictions of traditional models that universal w e bargaining will never arise in equilibrium the scope of bargaining puzzle we derive a number of testable hypotheses that address the recent shift towards more decentralized bargaining institutions the decline in unions bargaining power and the prevalence of w e bargaining

what drives infrastructure spending in cities of developing countries there exists a dearth of empirical studies on what determines infrastructure spending in cities of developing countries this in part can be attributed to the absence of quality data and the tendency for researchers to gloss over variations in infrastructure expenditure in or across developing world cities in the general belief that investment in infrastructure is generally low using the united nations human settlements programme s global urban indicators database this paper examines variations in infrastructure spending across cities in developing countries with a view to identifying the factors that explain these differences the empirical analysis identifies substantial intercity variations in infrastructure spending both across and within the regions of africa asia the middle east latin america and the caribbean and the economies in transition further analysis suggests that intercity variations in infrastructure spending are accounted for by differences in the macroeconomic environment urban g

strategic delegation and delay in negotiations over the bargaining agenda this paper develops a game theoretic model that endogenizes the items included in the bargaining agenda the model s equilibria suggest two possible sources of inefficiency 1 exclusion of items from the bargaining agenda and 2 delay to agreement due to negotiations over the bargaining agenda evidence from union contract negotiations is provided to demonstrate the relevance of these sources of inefficiency the model also allows strategic delegation by the union in certain equilibria the surplus maximizing union selects wage maximizing delegates such as senior union members to negotiate the contract

countervailing power and consumer prices this paper considers the importance of countervailing power manifested as the effects of increased retail concentration on consumer prices and welfare within a market setting where imperfectly competitive retailers negotiate intermediate prices with a monopoly supplier only when retailer services are regarded as very close substitutes do final prices fall following a reduction in the number of retailers even in these circumstances the social benefits of countervailing power may not be realised as the supplier may seek to protect its profits by using a refusal to supply restraint to engage in exclusive trading

corruption in public service delivery experience from south asia s water and sanitation sector summary this paper presents empirical information regarding the types and magnitude of corrupt behaviors documented in water supply and sanitation service provision in several south asian localities it also examines the strengths and weaknesses of current strategies to reduce corruption among several public water and sanitation bureaucracies in south asia drawing on interviews and focus group discussions with more than 1 400 staff customers and key informants where corruption has been reduced two concomitant drivers are observed a shift in the accountability networks of service providers and a change in the work environment that increases the moral cost of misconduct 2003 elsevier ltd all rights reserved

multiunit bargaining in oligopolistic industries a model of wage determination in unionized oligopolistic industries is developed and used to compare the outcome of collective bargaining under two different bargaining structures one in which the workers of each firm are represented by separate and independent unions local bargaining and one in which a national union represents all workers in the industry in both cases the bargaining problem has a unique outcome with industrywide bargaining resulting in higher wages in addition industrywide unions are inherently stable in that there are no incentives for independent unions to attempt to cheat on the collusive agreement

buyer power from joint listing decision we consider a model of vertically related markets in which an upstream firm faces a competitive fringe of less efficient suppliers and negotiates with customers that compete in a downstream market we allow downstream firms to form a buyer group which selects suppliers on behalf of its members we show that transforming individual listing decisions into a joint listing decision makes delisting less harmful for a group member which in turn enhances the group members bargaining position at the expense of the upstream firm we also discuss the implication for upstream investment incentives

the relative profitability of nash bargaining on the labour demand curve or the contract curve abstract given the nash bargaining solution with parametric bargaining strengths and threat points it is shown that profits are often higher if the bargaining agenda between a union and a single firm or two unions and cournot duopolists excludes employment

the strategic choice of union oligopoly bargaining agenda abstract this article analyzes the optimal choice of union oligopoly bargaining agenda i e right to manage versus efficient bargaining under possible market entry it is shown that agreement by both the union and the incumbent firm about efficient bargaining emerges as equilibrium in nash strategies even more so under non blockaded entry for deterrence motives this is consistent with the common empirical findings that unionized firms do not behave according to the prediction of the right to manage model that employment will be on the labor demand curve the entry deterrence effect highlighted in this paper also suggests that labor market organization should not be overlooked as a component of the welfare analysis of product market competition

the competition effects of industry wide vertical price fixing in bilateral oligopoly this paper examines the competition and welfare effects of vertical price fixing through industry wide resale price maintenance rpm arrangements such as those benefiting from exemption from a general prohibition against rpm a bilateral oligopoly framework is employed incorporating differentiation between manufacturer products and between retailer services transactions between the stages involve prices being determined through bargaining we do not find rpm to be universally undesirable however where retailer power is strong the social effects of rpm are likely to be adverse since the practice can assist in coordinating final price levels and prevent socially desirable countervailing power arising

exclusive contracts and bargaining power abstract incorporating nash bargaining into the standard one buyer one supplier framework in the chicago school critique we show a possibility that an inefficient incumbent supplier can deter a socially efficient new supplier entry through exclusive contracts

vertical bargaining and retail competition what drives countervailing power this article investigates the effects of changes in market concentration on the equilibrium prices in a supply chain results are derived from a theoretical model of bilateral bargaining between upstream and downstream firms which allows for general forms of demand and retail competition whether countervailing buyer power arises in the form of lower input prices following greater concentration downstream depends on the pass through rate of input prices to retail prices countervailing buyer power generally does not translate into lower retail prices because of heightened market power at the retail level

on the contract curve a test of alternative models of collective bargaining the traditional model of collective bargaining confines unions to settlements constrained by the employer s labor demand curve but an alternative model places wage employment outcomes on a contract curve that extends beyond the labor demand curve this paper derives a multidimensional hedonic contract curve model in which employment security provisions are used to maintain efficient bargains outside the employer s demand curve and distinguishes empirically between the contract curve and demand constraint models using data for public school teachers in new york state estimates clearly support the contract curve model over the demand constraint model by linking the gap between compensation and the value of the marginal product to the strength of employment security provisions

the welfare effects of upstream mergers in the presence of downstream entry barriers we examine the incentives for upstream firms to consolidate horizontally and the impact of this process on industry performance when there are downstream entry barriers and firms negotiate bilaterally in the short run consumers are not worse off with upstream mergers since consolidation only results in a redistribution of industry rents in the long run consumers are better off after upstream mergers since they induce more entry into that segment when social welfare is evaluated a limit on upstream consolidation may prevent excessive entry but upstream entry can be sometimes insufficient if the retailers intrinsic bargaining power is excessive

upfront payments and exclusion in downstream markets although upfront payments are often observed in contracts between manufacturers and retailers little is known about their competitive effects or the role retailers play in securing them in this article we consider a model in which two competing retailers make take it or leave it offers to a common manufacturer we find that upfront payments are a feature of equilibrium contracts and in all equilibria only one retailer buys from the manufacturer these findings support the claims of small manufacturers who argue that they are often unable to obtain widespread distribution for their products because of upfront payments copyright 2007 rand

bargaining ability and competitive advantage empirical evidence from medical devices in markets where buyers and suppliers negotiate supplier costs buyer willingness to pay and competition determine only a range of potential prices leaving the final price dependent on other fac

bilateral control with vertical contracts when a manufacturer contracts secretly with competing retailers he is subject to opportunism and linear or non linear tariffs may not allow the manufacturer to maintain monopoly prices to analyse the effects of rpm o brien shaffer 1992 use a concept of contract equilibrium which concentrates on pairwise deviations thereby questioning the robustness of the analysis this paper emphasises the distinction between the contract equilibrium and standard non cooperative concepts we advocate for some caution in the use of the former concept as if overlooks an inexistence problem we then confirm the intuition that rpm can help solve the manufacturer s commitment problem this confirms that o brien shaffer s insight is robust and validates the courts reluctance against rpm

the economic theory of vertical restraints the types of contracts arising in a typical vertical manufacturer retailer relationship are more sophisticated than a simple uniform price in addition to setting per unit prices manufacturers and retailers also revert to non linear pricing and non price instruments these instruments or contracts are referred to as vertical restraints and can take the form of franchise fees resale price maintenance exclusive dealing exclusive territories and slotting allowances the use and the effects of one type of instrument versus another depend crucially on specific market assumptions upstream and downstream and on the division of bargaining power between manufacturers and retailers this paper surveys the industrial organization literature on retail pricing and shows that vertical restraint instruments have important effects on producer and consumer prices market structure efficiency and welfare

upstream merger in a successive oligopoly who pays the price abstract this study applies a successive oligopoly model with an unobservable non linear tariff between upstream and downstream firms to analyze the possible anti competitive effects of an upstream merger in the norwegian food sector specifically the market for eggs the theoretical predictions are that an upstream merger may lead to higher average prices paid by downstream firms and at the same time no changes in the prices paid by consumers consistent with the theoretical predictions it is found that the merger had no effect on consumer prices but led to higher average prices paid by the downstream firms to the merged firm

buyer power in international markets this paper investigates the implications for international markets of the existence of retailers wholesalers with market power two main results are shown first in the presence of buyer power trade liberalization may lead to retail market concentration due to this concentration retail prices may be higher and welfare may be lower in free trade than in autarky thus reversing the standard effects of trade liberalization second the pro competitive effects of trade liberalization are weaker under buyer power than under seller power

global foreign direct investment flows the role of governance infrastructure abstract it is widely argued that a country s economic performance over time is determined to a great extent by its political institutional and legal environment we refer to these institutions and policies as the governance infrastructure of a country we utilize newly developed indices to examine the effects of governance infrastructure on both foreign direct investment fdi inflows and outflows for a broad sample of developed and developing countries over 1995 97 in addition we examine the role of other forms of infrastructure including human capital and the environment the results clearly indicate that governance infrastructure is an important determinant of both fdi inflows and outflows investments in governance infrastructure not only attract capital but also create the conditions under which domestic multinational corporations emerge and invest abroad it would appear that investments in governance infrastructure are subject to diminishing returns so that the benefits in terms of inflows are most pronounced for smaller and developing economies