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| On Buyer Power of Dominant Retailers Based on the Bilateral Bargaining and Government Regulation |
| ZHAO Bo ZHANG Li |
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Abstract Outside option value possessed by each of the two parties in the vertical transactional relation determines the bargaining power under the bilateral negotiation framework. The size and the role of dominant retailers acting as a "gatekeeper" are the major source of their market power and influence outside option value. Market power of dominant retailers may bringing about the beneficial "countervailing effects" or harmful "waterbed effects" depends on the market structure in retailing. The waterbed effects not only accelerate monopolization in retailing but also deteriorate consumers' welfare. Therefore, government regulation should pay great attention to mergers of dominant retailers, dominant retailers' exploiting small-medium-sized suppliers and dominant retailers' undue promotion with low price.
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Received: 03 September 2008
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Corresponding Authors:
ZHAO Bo
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2009, Vol. 1 
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