Retailer Buyer Power And Channel Fees

The vertical relationship between producers and the retailers consist of sophisticated contracts imposed on retailers by manufacturers that are heart of most modern industrial organization literature. In contrast, few literatures focuses the type of vertical restraints imposed on manufacturers by retailers .However, in the past decade ,due to the technology innovation ,retailers in many industries have become bigger in size to utilize economies of scale and scope ,with the industrial concentration enhanced ,retailers ,especially the chained store retailers ,seem to acquire the buyer power when bargaining with manufacturers and the retailers with bargaining power tend to impose vertical restraints on upstream manufacturers. Examples of these restraints include slotting fee , listing fee ,upfront payment among which the slotting allowance has become the fuse to induce the conflicts between the upstream and downstream .The viewpoints on the effect of retailers'buyer power are controversial. Some believe that the retailers'buyer power can be a countervailing power over the suppliers to lower the wholesale prices and pass the savings to consumers only if there exist fringe competitions among the downstream. Whereas others argue that the retailer market power may also have the anti-competition effect .This dissertation tend to make a research on the role of retailers buyer power on the downstream competition and the task is accomplished by two steps .firstly, this paper tends to explain the reason why retailer buyer power arise and then try to analyze the role of slotting allowance ,the main form of vertical restraints imposed by retailers on manufacturers .Based on analysis of the retailer industrial structure and concentration ,the conclusion is as follow: retailer industry have a trend to become monopolistic competition industry and the retailers are likely...