2003
Dominant retailers and the countervailing-power hypothesis
Publication
Publication
RAND Journal of Economics , Volume 34 - Issue 4 p. 612- 625
I assess rigorously the countervailing-power hypothesis using a model that captures the main ingredients of Galbraith's (1952) arguments as well as some of the important features of the retail industry. I demonstrate that an increase in the amount of countervailing power possessed by a dominant retailer can indeed lead to a fall in retail prices for consumers. However, total surplus does not always increase with the rise of countervailing power because of the possible efficiency loss in retailing. Furthermore, the presence of fringe competition is crucial for countervailing power to benefit consumers.
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doi.org/10.2307/1593779 | |
RAND Journal of Economics | |
Organisation | Department of Economics |
Chen, Z. (2003). Dominant retailers and the countervailing-power hypothesis. RAND Journal of Economics (Vol. 34, pp. 612–625). doi:10.2307/1593779
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