Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/64689 
Authors: 
Year of Publication: 
2011
Series/Report no.: 
cemmap working paper No. CWP32/11
Publisher: 
Centre for Microdata Methods and Practice (cemmap), London
Abstract: 
This paper provides a comprehensive econometric framework for the empirical analysis of countervailing power. It encompasses the two main features of pricing schemes in business-to-business relationships: nonlinear price schedules and bargaining over rents. Disentangling them is critical to the empirical identification of countervailing power. Testable predictions from the theoretical analysis for a pragmatic reduced form empirical pricing model are delineated. This model is readily implementable on the basis of transaction data, routinely collected by antitrust authorities and illustrated using data from the UK brick industry. The paper emphasizes the importance of controlling for endogeneity of volumes and established supply chains and for heterogeneity across buyers and sellers due to intrinsically unobservable outside options.
Subjects: 
countervailing power
bargaining
nonlinear prices
transaction panel data
JEL: 
D43
L11
L12
L14
L42
C23
C78
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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