Cartelization Through Buyer Groups

Buyer power in large buyer groups?

This paper studies the exertion of market power in large buyer groups confronting an incumbent monopolist and a potential market entrant in a repeated trade situation. In the experiment, buyer power can either occur as demand withholding when only the incumbent is present in the market, or it can take the form of buying at higher prices from the entrant in order to foster future re-entry. Compa...

Buyer groups as strategic commitments

Buyer cooperatives, buyer alliances, and horizontal mergers are often perceived as attempts to increase buyer power. While prior theoretical and empirical work has emphasized that buyer size can increase buyer surplus, I show that even a small group of buyers with heterogeneous preferences can increase price competition among rival sellers by forming a buyer group and committing to buy exclusiv...

Cartelization of Cross-Holdings∗

Cross-holdings between firms cause their profits to be mutually dependent. This paper analyzes a model of cross-holdings that calls for the firms to consider financial interests of the competitors in their profits instead of operating earnings. It is shown that cross-holdings induce tacit formation of cartels when they are irreducible. Consequently, the irreducibility of cross-holdings should b...

Efficient Buyer Groups for Prediction-of-Use Electricity Tariffs

Current electricity tariffs do not reflect the real cost that customers incur to suppliers, as units are charged at the same rate, regardless of how predictable each customer’s consumption is. A recent proposal to address this problem are prediction-of-use tariffs. In such tariffs, a customer is asked in advance to predict her future consumption, and is charged based both on her actual consumpt...

Robust Exclusion Through Loyalty Discounts With Buyer Commitment