analysingthe countervailing power hypothesis in iranian industries

Countervailing Power and Upstream Innovation

We challenge the view that the presence of powerful buyers stifles suppliers’ incentives to innovate. Following Katz (1987), we model countervailing (or buyer) power as the ability of, in particular, large buyers to substitute away from a given supplier. We employ a bargaining framework and find that the presence of larger and more powerful buyers increases a supplier’s incentives to reduce mar...

Countervailing Power and Chain Stores

Countervailing Power and Product Diversity

To analyse the effects of countervailing power on product variety, I construct a model in which a monopoly manufacturer sells a set of differentiated products through a large retailer and many small, competitive retailers. It is shown that an increase in the countervailing power of the large retailer tends to reduce the number of products manufactured in equilibrium, and the reduction in produc...

Countervailing Power in the Icelandic Cement Industry

The Icelandic Competition Council recently ruled that a cement supplier with 75% market share did not enjoy a dominant position. The ruling was based on countervailing power of local concrete producers. To test whether there are economic arguments for the ruling, we present a simplified model of the industry and apply and adapt some recent work on bilateral oligopoly. We show that, in equilibri...

Countervailing Power? Collusion in Markets with Decentralized Trade∗

We consider the collective incentives of buyers and sellers to form cartels in markets with decentralized trade and pairwise bargaining. Cartels are coalitions of buyers or sellers that limit market participation and compensate inactive members for abstaining from trade. In a stable market outcome, cartels set Nash equilibrium quantities and cartel memberships are immune to defections. We prove...

Monopsony and Countervailing Power in the Market for Nurses

Introduction In recent years, there have been a number of antitrust suits filed by registered nurses (RNs) alleging that their wages and other terms of employment have been depressed through collusion among the hospitals in their local market. In most of these cases, the issue involved collusive monopsony, which is unlawful as discussed in the Supreme Court’s Mandeville Island Farms decision. T...