Seminar

Buyer power and capacity consolidation

Lluis Bru (Universitat de les Illes Balears)

December 2, 2013, 11:00–12:30

Toulouse

Room MF 323

Agricultural and Food Industrial Organization Seminar

Abstract

This paper shows that market power in a final market confers buyer power in intermediate markets, and leads to quantity discounts for large buyers. Then it is also shown that buyer power gives incentives to create a dominant firm downstream through the acquisition of capacity of already existing firms, even if its owners must be paid the higher profits they anticipate should they remain in the industry.