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Seoul Journal of Economics - Vol. 35 , No. 3
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Seoul Journal of Economics - Vol. 35, No. 3, pp. 261-290
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 31 Aug 2022
Received 21 Jun 2022 Revised 05 Jul 2022 Accepted 05 Jul 2022
DOI: https://doi.org/10.22904/sje.2022.35.3.003

Buyer Power and Information Sharing
In Kyung Kim ; Vladyslav Nora
In Kyung Kim, Corresponding author, Assistant Professor, School of Economics and Trade, Kyungpook National University, Daegu 41566, South Korea (in.kim@knu.ac.kr)
Vladyslav Nora, Assistant Professor, Department of Economics, Nazarbayev University, Kazakhstan (vladyslav.nora@nu.edu.kz)

JEL Classification: D82, D83, L81

Abstract

We examine how buyer power affects the incentives of producers to share information with retailers. First, we develop a theoretical model suggesting that increasing buyer power will discourage information sharing between producers and retailers. Second, we test this prediction by adopting the idea that recommended retail prices (RPRs) serve as an information-sharing device between manufacturers and retailers. Using manually collected information on RPRs for certain grocery products in Korea, we find that the more the sales of a product rely on powerful retailers, the less likely manufacturers will recommend prices. As revealing information can increase industry profits, our analysis highlights potential inefficiencies from the rise of powerful retailers.

Keywords: buyer power, information disclosure, retail industry, retail price recommendation
Acknowledgments

We are grateful to the seminar participants at KAIST and Sogang University.

The authors declare that they have no conflict of interest.

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