Abstract
Purpose – the purpose of the article is to examine how the extent of competition in the market affects the balance of bargaining powers of market participants. This often results in negative consequences for both buyers and suppliers. This study has important theoretical and practical implications. The authors made an analysis of existing theory and practice on negotiation strategies in a complex way, in accordance with levels of competition. Paper reveals the opportunities to develop and implement these strategies, taking into account market definition options. Research methodology – the paper examines the application of Nash equilibrium to the preparation of negotiation strategies, looking at the function for the best result. The study would help to prepare business strategies for different competition levels. Findings – the ways of preparation of negotiation strategies with different levels of competition, focusing on market definition opportunities. Research limitations – there are not enough measures in international business negotiation theory helping to develop negotiation strategies in the face of distorted market competition and difficulties to define the market. Practical implications – findings of the article will give opportunities for policymakers to develop and implement strategies for business negotiations. Originality – the article consists presentation of new tools for negotiators in preparing negotiating strategies.
Highlights
The extent of competition in the market affects the balance of bargaining power of market participants
Nash equilibrium helps negotiators work out how competing companies set their prices, how governments should design auctions to squeeze the most from bidders and how to explain the sometimes self– defeating decisions that groups make. It is a widely used analytical basis to analyze and evaluate the problems of competition that have an impact on the preparation of the negotiation strategy
The relevant market should be defined in such a way that the competitive constraints faced by the company, that is substitutes of demand and supply side, would be captured as accurately as possible
Summary
The extent of competition in the market affects the balance of bargaining power of market participants This often results in negative consequences for both buyers and suppliers. More competition opens up opportunities for the development of international business, because, with more market participants, additional business alternatives appear, reducing the negative impact of distorted competition on the balance of negotiating power of international business negotiators. The purpose of this article is to examine how the extent of competition in the market affects the balance of bargaining powers of market participants. The relevant market is usually determined using a hypothetical monopoly test (known as the SSNIP test), whereby the “market” covers all products and regions where the hypothetical profit monopoly reaches a small but significant price increase (Kaplow, 2018; OECD, 2012, 2016a; Ghosal &Tonin, 2018)
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