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The Buyer Power Effect of Retail Mergers: An Empirical Model of Bargaining with Equilibrium of Fear

Céline Bonnet et al.

RAND Journal of Economics2025https://doi.org/10.1111/1756-2171.12498article
AJG 4ABDC A*
Weight
0.50

Abstract

We develop a bilateral oligopoly framework with manufacturer‐retailer bargaining to analyze the impact of retail mergers on market outcomes. We show that the surplus division between manufacturers and retailers depends on three bargaining forces and can be interpreted in terms of an “equilibrium of fear”. We estimate our framework in the French soft drink industry and find that retailers have greater bargaining power than manufacturers. Using counterfactual simulations, we highlight that retail mergers increase retailers' fear of disagreement relative to that of manufacturers, which weakens their buyer power and leads to higher wholesale and retail prices.

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https://doi.org/https://doi.org/10.1111/1756-2171.12498

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@article{céline2025,
  title        = {{The Buyer Power Effect of Retail Mergers: An Empirical Model of Bargaining with Equilibrium of Fear}},
  author       = {Céline Bonnet et al.},
  journal      = {RAND Journal of Economics},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1111/1756-2171.12498},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.47 × 0.4 = 0.19
M · momentum0.60 × 0.15 = 0.09
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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