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- Publisher
- Wiley
- Copyright
- "© 2019 The RAND Corporation"
- ISSN
- 0741-6261
- eISSN
- 1756-2171
- DOI
- 10.1111/1756-2171.12261
- Publisher site
- See Article on Publisher Site
Abstract
We study bilateral bargaining between several buyers and sellers in a framework that allows both sides, in case of a bilateral disagreement, flexibility to adjust trade with each of their other trading partners and receive the gross benefit generated by each adjustment. A larger buyer pays a higher per‐unit price when buyers' bargaining power in bilateral negotiations is sufficiently low, and a lower price otherwise. An analogous result holds for sellers. These predictions, and the implications of different technologies, are explained by the fact that size is a source of mutual dependency and not an unequivocal source of power.
Journal
The Rand Journal of Economics – Wiley
Published: Mar 1, 2019