We analyze the implications of the buyer’s strategic power in the model of dynamic price competition. Two sellers with a limited inventory sell to a single buyer, who has unit for in each of several time periods. The market power of the sellers is offset by the strategic power of the buyer. By not consuming in any period, the buyer can destroy a unit of demand, thereby intensifying future price...

Under the optimal scheme identified in Theorem 2, the response by each buyer moves in the direction of the response dominant among their predecessors. In other words, a buyer accepts with a higher probability than his predecessor when most buyers before him have chosen to accept, and rejects with a higher probability when most buyers before him have chosen to reject. Formally, the following pro...

This paper presents a critique of the normative, buyer-supplier literature and in addition suggests that the more empirically-based literature needs to expand its scope of attention beyond its traditional confines of attention. Four main deficiencies are identified within much of the existing buyer-supplier literature. Firstly, collaborative buyer-supplier theories fail to discriminate sufficie...

When the seller of an asset grants a right-of-first-refusal to a buyer, this special buyer has the opportunity to purchase the asset at the best price the seller can obtain from the other potential buyers. We show that the right-of-first-refusal is inefficient, and it benefits the special buyer at the expense of the seller and other buyers. In a private values model, the benefit from granting a...

In this paper, several seller–buyer supply chain models are proposed which incorporate both cost factors as well as elements of competition and cooperation between seller and buyer. We assume that unit marketing expenditure and unit price charged by the buyer influence the demand of the product being sold. The relationships between seller and buyer will be modeled by non-cooperative and coopera...

The rise to prominence of Wal-Mart and other big-box retailers has given new life to the debate about whether “buyer power” at intermediate links in a vertically related chain of industries is good or bad for consumers and hence whether it requires the attention of competition authorities. The term is rarely precisely defined, but as used by most commentators “buyer power” refers to the circums...

There is a seller who has an object to sell to a single buyer. The seller’s value for the object is c. The buyer’s valuation, v, is distributed according to the CDF F supported on (−∞, 1]. Let μ denote the expected valuation, that is, ∫ 1 0 vdF (v) = μ. The buyer observes a signal s about v. The joint distribution of v and s is common knowledge. The seller then gives a take-it-or-leave-it price...

This paper finds an optimal mechanism for selling a good to a buyer who may be budget-constrained. We consider a seller with one unit of a good facing a buyer with a quasilinear utility function. If the buyer does not face a binding budget constraint, textbook monopoly pricing is optimal. By contrast, the possibility of a binding budget constraint can make it optimal for the seller to use nonli...