Beckert, Walter (2025) Competition in a spatially-differentiated product market with negotiated prices. The Review of Economics Studies , ISSN 0034-6527. (In Press)
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Abstract
In many markets, buyers make discrete choices between differentiated products and negotiate prices that are specific to the choice. We develop for estimation a model for this class of markets which is consistent with non-cooperative models of bargaining between a buyer and competing sellers. We show that when the buyer’s utility has GEV disturbances, the model has a tractable likelihood function which can be used with transaction-level data giving the selected product and its price. We estimate the model using data from the UK brick industry and use it to mea- sure market power and analyze mergers. We analyze how spatial differentiation and ownership concentration affect the distribution of market power across trans- actions. In counterfactuals we find that switching from individually-negotiated to uniform pricing causes markups, and merger price effects, to increase on average but to decrease for a minority of transactions.
Metadata
| Item Type: | Article |
|---|---|
| School: | Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School |
| Depositing User: | Walter Beckert |
| Date Deposited: | 27 Feb 2025 12:58 |
| Last Modified: | 31 Mar 2025 23:01 |
| URI: | https://eprints.bbk.ac.uk/id/eprint/55081 |
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