Template-type: ReDIF-Paper 1.0
Author-Name: Jim Engle-Warnick 
Author-Email: jim.engle-warnick@nuff.ox.ac.uk
Author-Workplace-Name:Nuffield College, Oxford
Author-Workplace-Homepage:http://www.nuff.ox.ac.uk/
Author-Name: Bradley Ruffle
Author-Email: bradley@bgumail.bgu.ac.il
Author-Workplace-Name:Dept of Economics, Ben-Gurion University
Title: Buyer Countervailing Power versus Monopoly Power: Evidence from Experimental Posted-Offer Markets
Abstract:
  Although much research has been devoted to the impact
  of seller structure on market outcomes, considerably
  less is known about the influence of buyer structure.
  We examine the impact of buyer concentration on the
  pricing of a monopolist.  Markets with both two and
  four buyers achieve prices well below the monopoly
  price, attaining even competitive levels - sometimes
  even lower.  Moreover, markets with only two buyers
  show significantly lower prices than those with four
  buyers.  We design an additional pair of treatments to
  pinpoint the source of this difference.  We attribute
  the lower prices in the two-buyer treatment to the
  monopolist pricing more cautiously when there are
  fewer buyers in order to avoid costly losses in sales.
  Buyer concentration is thus an effective source of
  countervailing power: even an unregulated monopolist
  that faces no possible threat of entry may price competitively.
Classification-JEL:C91, D42, L4
Keywords: strategic buyer behavior, buyer concentration, monopoly,
  experimental economics
Length:27 pages
Creation-Date: 2002-04-01
Number:2002-W14
File-URL:http://www.nuff.ox.ac.uk/economics/papers/2002/w14/buyer_power_nuf.pdf
File-Format: application/pdf
Handle: RePEc:nuf:econwp:0214