It is generally agreed that ‘power’ and ‘dependence’ are important concepts for the understanding of buyer-seller relationships. However, little research has been carried out aimed at identifying determinants of dependence in dyadic buyer-supplier relationships. In this study we have addressed this gap, combining an extensive literature study with an empirical study (expert interviews). The stu...

We model new experience goods in the context of dynamic mechanism design. These are goods for which an agent is unsure of her valuation but can learn it through consumption experience. We consider a dynamic environment with a single buyer and seller in which contracting occurs over T periods, where each time the agent consumes the object, she receives a signal which allows her to revise her val...

This paper analyzes the e ect of a possible takeover on information ows and on the terms of trade in business relationships. We consider a longterm relationship between a rm and a privately informed stakeholder, say a buyer. In our model, takeovers both increase the surplus from trade and enable the rm to extract a potentially higher share of the surplus from the buyer. The possibility of a tak...

Economic intuition suggests that increased competition generates lower prices. However, recent theoretical work shows that a monopolist may charge a lower price than a firm facing a competitor selling a differentiated product. The direction of the price change when competition is introduced is dependent upon the joint distribution of buyer values for the two products. We explore this relationsh...

This article characterizes the conditions under which holdout (i.e. bargaining inefficiency) may, or may not be significant in a two-sided, one-buyer-many-seller model with complementarity. Our central result is that the severity of holdout (i.e. inefficiency) is critically dependent on three factors, (a) the transparency of the bargaining protocol, (b) the outside option of the buyer, and (c) ...

We study the structure of an optimal management for innovative activities. The top management of a buyer hires a supplier for production. The production e¢ ciency can be enhanced by investing in R&D before production. The buyer chooses between using its own subunit for the R&D, or outsourcing the task to the supplier (integration of R&D and production). Our analysis reveals that (i) when the R&...

This paper discusses the limitations of current on-line auction systems and presents our guidelines for more dynamic attribute-based bidding. Our prototype application for airline flight bidding demonstrates our vision for interfaces that facilitate negotiation between buyers and sellers. INTRODUCTION Despite the growth in the number of on-line auction sites, there is still a need for a more dy...

In this paper we investigate four sourcing models with respect to both cooperative or noncooperative planning strategies, and sole or dual sourcing. A two-stage supply chain is considered, which includes a single buyer and either a single or dual vendor(s). At the buyer the product is consumed at a constant rate, and an (r, Q) policy is used to generate replenishment orders. The vendors have a ...

This paper investigates how the formation of larger buyers affects a supplier’s profits and, by doing so, his incentives to undertake non-contractible activities. We first identify two channels of buyer power, which allows larger buyers to obtain discounts. We subsequently examine the effects of buyer power on the supplier’s incentives and on social welfare. Contrary to some informal claims in ...