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Rémi Avignon – "Buying Groups and Product Variety"
CREST Internal Seminar in Microeconomics :
Date: 27th May 2019
Place: Room 3105.
Rémi Avignon – “Buying Groups and Product Variety”
We study the impact of retailers’ buying groups on both product variety and the profit sharing within the vertical chain. We consider a setting in which capacity constrained retailers operate in separated markets and must select their assortment among a set of differentiated products. Retailers may either adopt an independent listing strategy or a joint listing strategy (i.e they commit to listing the same product assortment) which may cover the whole product line (full coverage) or only part of it (partial coverage). We show that retailers may enhance their buyer power by jointly committing to a common listing strategy. As a result, buying groups reduce the overall product variety. This results in lower overall consumer surplus. Interestingly buying groups with partial coverage may be more profitable for the retailers than those with full coverage.
Alexis Larousse (CREST)
no registration needed