Retail Mergers, Buyer Power and Product Variety

Bibliographic Data

ID9718356
AuthorsRoman Inderst (0000-0002-1076-9927, London School of Economics and Political Science), Greg Shaffer (0000-0003-3112-7189, University of Rochester)
Year2007
Volume117
Issue516
Pages45-67
Publication date2007-01-01
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/j.1468-0297.2007.02001.x
OpenAlexW2136415844
LanguageEN
Citations received8
References cited19

This article analyses the impact of retail mergers on product variety. We show that, following a merger, a retailer may want to enhance its buyer power by committing to a 'single-sourcing' purchasing strategy. Anticipating further concentration in the retail industry, suppliers will strategically choose to produce less differentiated products, which further reduces product variety. If negotiations are efficient, the overall loss in product variety may reduce consumer surplus and total welfare. With linear tariffs, however, there may be a countervailing effect as the more powerful retailer passes on lower prices to final consumers. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007

Business · Commerce · Industrial organization · Power (physics · Product (mathematics · Variety (cybernetics · Computer Science · Consumer Market Behavior and Pricing · Digital Platforms and Economics · Marketing · Merger and Competition Analysis

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