Independent Buyers Research Articles

Coordination in the Fight against Collusion

While antitrust authorities strive to detect, prosecute, and thereby deter collusive conduct, entities harmed by that conduct are also advised to pursue their own strategies to deter collusion. The implications of such delegation of deterrence have largely been ignored, however. In a procurement context, we find that buyers may prefer to accommodate rather than deter collusion among their suppliers. We also show that a multimarket buyer, such as a centralized procurement authority, may optimally deter collusion when multiple independent buyers would not, consistent with the view that “large” buyers are less susceptible to collusion. (JEL D21, D43, D44, L12, L14)

Cheap Exclusion in Markets with Multiple Complements

We extend the theory of exclusive dealing in first-mover environments to settings where the incumbent seller’s product is used with multiple complements in a distribution chain and the incumbent can sign exclusive dealing contracts with more than one of them. The model is motivated by the market for biosimilar pharmaceuticals, where incumbent sellers that face a threat of entry can sign exclusionary contracts with both providers and insurance carriers prior to entry. We show that when the incumbent’s complementors are vertically related, it can be profitable for the incumbent to sign exclusive contracts with indirect buyers, who operate downstream from the direct buyers of the product. Under linear pricing, such exclusion is profitable if the pass-through rate is sufficiently low, and under nonlinear pricing and symmetric Nash bargaining, it is profitable for all pass-through rates. Complementors face a more severe coordination problem than independent buyers that can make anticompetitive exclusion more likely and especially cheap.

Crop protection market segmentation: relationship between buyer segments and the use of digital sales channels

Digital technologies are revolutionizing agricultural trade, enabling farm input suppliers to reach customers through multiple channels. The aim of this study was to segment farmers based on their purchasing behavior for crop protection products and to examine segment-specific characteristics in the digital environment. A cluster analysis of 590 German farm managers was used to identify five distinctive buyer segments based on five characteristics: dealer, brand and service orientation, price affinity and autonomous decision making. The results demonstrate that farmers place high value on personal contacts to stationary suppliers when purchasing crop protection products. Service orientation turned out to be a strong mediator of segment membership, while price and product brand are secondary to farmer segmentation. However, traditional typologies are only suitable for the digitization topic to a limited extent, as digital search and information behavior hardly differs. Even though digital information procurement is becoming increasingly interesting for all segments, an openness to e-commerce applies only to a small group of independent buyers. Concerning e-commerce attitudes, the perception of its advantages and the lack of personal contact differentiates the clusters the most. The results contribute to the scientific understanding of farmers’ information and purchasing behavior and provide initial approaches for the development of customer-centric corporate marketing strategies.

Factors affecting eWOM credibility, information adoption and purchase intention on Generation Y: a case from Thailand

PurposeWith the ever-expanding online shopping, electronic word-of-mouth (eWOM) has become a significant factor affecting the consumer decision-making behaviour. This is specially the case when considering Generation Y (Millennials), who are old enough to be independent buyers and young to be almost immersed in online living. This article aims to assess the impact of eWOM on purchase intention by developing a conceptual model of hypotheses encompassing a multitude of factors that may be associated with this relationship.Design/methodology/approachThe researcher investigates what factors impact eWOM credibility and make the consumer may adopt it when making a purchase. To examine our research model, a quantitative approach is employed for this purpose using a sample through online survey from Thailand – where there is a large number portion Generation Y consumer base.FindingsIt was found that source style as a visual attribute information is the most significant factor that may impact eWOM credibility in addition to source credibility, argument quality and source homophily, respectively.Practical implicationsFrom a practical point of view, it helps firms to understand what needs to be taken into consideration when building their marketing strategy.Originality/valueThis is believed to add significant insights into the eWOM literature by identifying its route of impact toward the purchase intention on Generation Y.

Fair Comparison, Objective Examination and Positive Evidence in Undercutting Margins Computed in EU Trade Defence Investigation? No, Thanks

In recent years, the European Commission has changed its practice of assessing price undercutting in trade defence investigations where the exporter sells via related sales subsidiaries. In such cases, undercutting was calculated on the basis of a ‘constructed export price’, obtained by deducting selling, general and administrative costs and notional profits from the actual export price. This practice was successfully challenged in Case T-301/16 Jindal v. Commission, where the General Court found that the European Commission had failed to compare prices at the same level of trade. The General Court also highlighted the importance of calculating undercutting on the basis of the actual prices charged to the first independent buyers.

Long-Term Partnership for Achieving Efficient Capacity Allocation

Kuribo et al. (2019) studies a capacity provider and a group of independent buyers sharing a scarce but expensive-to-build capacity over a finite horizon. At the beginning of the horizon, the capac...

A duality-based unified approach to Bayesian mechanism design

In this letter we briefly survey our recent work [Cai et al. 2016]. In it, we provide a new duality theory for Bayesian mechanism design which is quite general, and applies for any objective the designer wishes to optimize, and for arbitrary agent valuations. We then apply our theory to auction design settings with many independent buyers who have independent values for many items, and are able to provide a unified proof of several recent exciting works on this front [Hart and Nisan 2012; Li and Yao 2013; Babaioff et al. 2014; Yao 2015; Chawla et al. 2007; Chawla et al. 2010; Chawla et al. 2015]. These works all show that simple mechanisms are approximately optimal in various settings. In some cases, our principled approach yields greatly improved approximation ratios as well.

Role of children in family purchase across Indian parental clusters

Purpose– The study aims to explore the evolving status of children as active consumers in the emerging Indian market by assessing their impact on family buying practices across distinct parental clusters.Design/methodology/approach– The study uses a structured questionnaire to draw a quota sample of 136 urban Indian parents across four child segments from two Indian metropolitan cities to understand their attitudes towards parenting and the consequent empowerment of their children for actively participating in family purchase decisions around varied children’s product categories.Findings– Exploratory factor analysis reveals five well-defined parental attitudes towards child rearing. The attitudinal factors are used to define three discrete parental clusters, namely, time-pressed parents, child-centric parents and socially influenced parents. The demographic and psychographic profiles of the clusters expose the significant influence of the educated and affluent parents in empowering their children as more active influencers/consumers. The role of children as independent buyers of eatables and toys over other categories is also re-established.Research limitations/implications– The diversity of Indian parents both in terms of their family structure and attitude towards parenting significantly deliver decisive signals for market-specific segmentation strategies. The uniformity in their shopping frequency and increasing child involvement in family purchases also highlight the opportunities ahead.Originality/value– Empirical evidences on the growing role of children in family purchases and their transformation into active consumer in an evolving market adds to the existing under-represented family consumption literature with more market-specific insights.

Dynamic analysis of policy drivers for bioenergy commodity markets

Biomass is increasingly being considered as a feedstock to provide a clean and renewable source of energy in the form of both liquid fuels and electric power. In the United States, the biofuels and biopower industries are regulated by different policies and have different drivers, which impact the maximum price the industries are willing to pay for biomass. This article describes a dynamic computer simulation model that analyzes future behavior of bioenergy feedstock markets given policy and technical options. The model simulates the long-term dynamics of these markets by treating advanced biomass feedstocks as a commodity and projecting the total demand of each industry, as well as the market price over time. The model is used for an analysis of the United States bioenergy feedstock market that projects supply, demand, and market price given three independent buyers: domestic biopower, domestic biofuels, and foreign exports. With base-case assumptions, the biofuels industry is able to dominate the market and meet the federal Renewable Fuel Standard (RFS) targets for advanced biofuels. Further analyses suggest that United States bioenergy studies should include estimates of export demand in their projections, and that GHG-limiting policy would partially shield both industries from export dominance.

Streamlining inventory flows with time discounts to improve the profits of a decentralized supply chain

We consider a decentralized supply chain, whereby a supplier sells a product to a group of independent buyers, and develop a strategy for the supplier to offer an all-units price discount or cash rebate for orders that are synchronized with its replenishments. As synchronized orders can be met with inventory directly from receiving to shipping without warehousing, the proposed strategy streamlines system inventory flows to minimize inventory and, hence, the related costs. On the other hand, by increasing the replenishment interval of the supplier, the proposed strategy is able to induce buyers to order in large quantities and hence achieve the objectives of quantity discounts. We show that the proposed strategy can achieve nearly optimal (minimum) system cost, and is much more effective than the existing coordination strategies for decentralized supply chains in the literature.

Rights-based food systems and the goals of food systems reform

Food security, health, decent livelihoods, gender equity, safe working conditions, cultural identity and participation in cultural life are basic human rights that can be achieved at least in part through the food system. But current trends in the US prevent full realization of these economic, social, and cultural rights (ESCR) for residents, farmers, and wageworkers in the food system. Supply chains that strive to meet the goals of social justice, economic equity, and environmental quality better than the dominant globalized food value networks are gaining popularity in the US. However, achieving important human rights has become conflated with other goals of food system reform over the past decade, such as being “community-based,” local, and sustainable. This conflation confuses means, ends, and complementary goals; and it may lead activists trying to help communities to regain control of their food system choices into less productive strategies. This paper introduces a new concept, rights-based food systems (RBFS), and explores its connection with localization and sustainability. The core criteria of RBFS are democratic participation in food system choices affecting more than one sector; fair, transparent access by producers to all necessary resources for food production and marketing; multiple independent buyers; absence of human exploitation; absence of resource exploitation; and no impingement on the ability of people in other locales to meet this set of criteria. Localization and a community base can help achieve RBFS by facilitating food democracy and reducing environmental exploitation, primarily by lowering environmental costs due to long-distance transportation. Sustainability per se is an empty goal for food system reform, unless what will be sustained and for whom are specified. The RBFS concept helps to clarify what is worth sustaining and who is most susceptible to neglect in attempts to reform food systems. Localization can be a means toward sustainability if local food systems are also RBFS.

Coordinating independent buyers with integer‐ratio time coordination and quantity discounts

AbstractSupply chain members can gain substantial benefits by coordinating their activities. However, a remaining challenge is to create useful coordination mechanisms when channel members are independent. This paper develops a coordination strategy with which a supplier uses quantity discounts to entice independent buyers to comply with an integer‐ratio time coordination scheme. The problem is analyzed as a Stackelberg game in which the supplier acts as the leader by announcing its coordination policy in advance and buyers act as followers by deciding their ordering decisions with this information. The strategy is compared to a coordination mechanism with quantity discounts and power‐of‐two time coordination. While both strategies are able to produce substantial benefits over simple quantity discounts, integer‐ratio time coordination provides a better coordination mechanism for a decentralized supply chain. It is shown that power‐of‐two time coordination may not be able to provide a stable equilibrium coordination strategy when buyers act independently and opportunistically. Furthermore, if this is not the case, integer‐ratio time coordination is at least equally effective. Unlike a centralized solution, under which the improvement by integer‐ratio over power‐of‐two time coordination is limited to 2% of optimality, system cost reduction from a decentralized coordination strategy could be much more significant. © 2003 Wiley Periodicals, Inc. Naval Research Logistics, 2004.

'Successes' and 'Failures' in the Markets for Technology

Market-mediated contracts for technology trade are bound by several transaction costs. This paper argues that as these transaction costs become less severe, markets for technology can help improve three market failures: (i) RD (ii) externalities in potentially public RD and (iii) deviations from marginal cost pricing in the downstream product markets. In addition, with larger markets of potential users, the technology suppliers will have incentives to produce more ‘general’ technologies which span a wider number of firms or industries. Markets for technology also produce new failures. In particular, they induce deviation from marginal cost pricing in the sale of the technology, and they generate externalities associated with complementary R&D and other investments made by the independent buyers and suppliers that operate in them. The paper concludes by discussing policy implications.

Coordinating Independent Buyers in a Distribution System to Increase a Vendor's Profits

We study the coordination of a two-echelon distribution system where a vendor distributes a single product to a set of independent buyers. The problem is analyzed as a Stackelberg game in which the vendor acts as the leader and buyers act as followers. A simple strategy is developed for the vendor to employ a uniform quantity-discount policy to coordinate buyers' replenishment times by the power-of-two policy. Solution procedures are developed for the equilibrium strategy. It is shown that time coordination generally has a substantial benefit for the vendor, although the benefit to the buyers may be limited. Furthermore, uniform quantity discounts to all buyers are normally feasible but not sufficient to achieve perfect channel coordination when buyers act independently. The proposed strategy obtains a high proportion of the maximum benefit under perfect channel coordination.

Residual value of horses

The owners and managers of an equine packing plant in Illinois were interviewed, and their operation was observed in order to determine the nature of the horse meat trade, and to assess the residual value of horses as meat animals. All meat products were exported for human consumption in the European and Japanese markets. Belgium, France and The Netherlands were the primary consumer nations. Prices paid for horses in 1988 ranged from $.15 to $.47 per lb. of live weight and depended on size, muscle thickness and body condition. Seasonal variation in prices was found. The highest prices were paid for horses during the period of January through April. The lowest prices were paid for horses during October and November. The packing plant impacted the Illinois and surrounding Midwest horse industry by supplying a market for low-quality horses. In 1988, this company purchased 25,000 horses with little value other than as meat animals. It also provided employment to 85 full time workers at an average wage of $6.00 per hour. In addition, 5 commission buyers and 6 independent buyers gained employment as suppliers of horses to the plant.

Domesticated Markets as Barriers to New Competition

Long-term arrangements between buyers and sellers, called domesticated markets, previously have been seen to lessen horizontal competition among sellers. This article argues that domesticated markets have an additional effect on competition: the erection of barriers to entry. In particular, potential new sellers face a reduction in the number of independent buyers, which constricts available market opportunities and thereby discourages entry. A measure of the barrier effect is introduced, examples of the application of the measure are presented, and properties of the measure are discussed.

The Implementation of Oligopolistic Interdependence: International Oil, a Case Study

Oligopolistic interdependence strikes a balance between collusion and self restraint and effectively reduces competition. The petroleum exporting countries (OPEC) in 1973 were able to avoid exceeding a predetermined growth rate and later impose sufficient curtailments to hold the cartel together. Market control could easily be lost if any one member overextended production in order to meet increased demands or reduce inventory. Production figures are given for the 11 countries to show the fluctuations in individual output and a straight line increase in output for the total cartel. U.S. published forecasts of supply were probably helpful to OPEC in predicting demand and allocating shares to the member countries. If major oil purchasing companies can secure lands where they formerly held concessions and state-owned producing companies sell to independent buyers, competition will be introduced in the consuming markets. (27 references) (DCK)

Impact of Marketing Agreements and Orders on the Marketing of Milk

UBLIC control of the pricing of market milk was undertaken primarily for the purpose of raising the incomes of producers to a more satisfactory level. At the time these controls were instituted milk prices and the prices of farm products generally were so low that farmers were hard pressed, and were demanding insistently that effective steps be taken to remedy the situation. In addition to the primary objective of promptly increasing the financial returns to milk producers, a continuing purpose of public control has been to maintain a stable price structure and to prevent unwarranted reductions in the prices paid producers as result of price wars among distributors, or other causes. Closely related to this function of stabilizing producer milk prices is that of providing for an equitable sharing of returns from fluid sales and surplus disposal in the various markets, and of eliminating unfair advantages in the purchase of milk that were enjoyed by certain handlers. Before public control was undertaken, some dealers in practically every market bought milk independently rather than through the leading producers' organization. By limiting their purchases to little more than the quantities sold for fluid use, and paying flat prices that were about the same or only slightly higher than the blended or pool prices paid by the cooperative or by the large dealers, these independent buyers obtained milk for fluid sales at a net cost considerably less than the announced Class I prices. Under federal and state milk marketing orders such disparities in costs and returns are eliminated by extending the classified price plan throughout the market, and by requiring all handlers to pay the full Class I price for milk used for fluid sales. It is obvious that some gain in returns to producers results by making the classified price plan effective throughout the market and enforcing a minimum price for each class of milk. Further increases in producers' returns were sought by the milk control authorities through fixing prices for fluid milk at higher levels than could be