Tuesday, May 22, 2018

Buyer Power and Non-Binding Retail Price Recommendations

In Kyung Kim (Nazarbayev University) and Vladyslav Nora (Nazarbayev University) share Buyer Power and Non-Binding Retail Price Recommendations.

ABSTRACT: We study how the use of non-binding retail price recommendations (RPRs) is affected by buyer power in grocery retail market. Adopting the idea that RPRs serve as information sharing device between manufacturers and retailers, we show that increasing buyer power discourages the use of RPRs. Using the hand collected data set on the presence of RPRs for grocery products in Korea, we find that the more the sales of a product rely on powerful retailers, the less likely the manufacturer is to recommend a price, and hence share the information.


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