Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Tuesday, January 10, 2012

Empirical Analysis of Countervailing Power in Business-to-Business Bargaining

Posted by D. Daniel Sokol

Walter Beckert (Department of Economics, Mathematics & Statistics, Birkbeck) offers Empirical Analysis of Countervailing Power in Business-to-Business Bargaining.

ABSTRACT: This paper provides a comprehensive econometric framework for the empirical analysis of countervailing 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 countervailing power. Testable predictions from the theoretical analysis for a pragmatic reduced form empirical pricing model are delineated. This model is readily implementable on the basis of transaction data, routinely collected by antitrust authorities and illustrated using data from the UK brick industry. The paper emphasizes the importance of controlling for endogeneity of volumes and established supply chains and for heterogeneity across buyers and sellers due to intrinsically unobservable outside options.

http://lawprofessors.typepad.com/antitrustprof_blog/2012/01/empirical-analysis-of-countervailing-power-in-business-to-business-bargaining-.html

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