Buyer Power and Non-Binding Retail Price Recommendations

Research output: Working paper

Abstract

We study how buyer power in grocery retail market affects the use of non-binding retail price recommendations (RPRs). Adopting the idea that RPRs serve as information sharing device between manufacturers and retailers, we show that increasing buyer power discourages
the use of RPRs. Using the hand collected data set on the presence of RPRs for grocery products
in Korea, we find that the more the sales of a product rely on powerful retailers, the less likely
the manufacturer is to recommend a price, and hence share the information.
Original languageEnglish
Publication statusIn preparation - 2017

Fingerprint

Retail prices
Buyer power
Grocery
Retailers
Korea
Information sharing
Retail market

Keywords

  • buyer power, manufacturer suggested retail prices, and grocery retailing

Cite this

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abstract = "We study how buyer power in grocery retail market affects the use of non-binding retail price recommendations (RPRs). Adopting the idea that RPRs serve as information sharing device between manufacturers and retailers, we show that increasing buyer power discouragesthe use of RPRs. Using the hand collected data set on the presence of RPRs for grocery productsin Korea, we find that the more the sales of a product rely on powerful retailers, the less likelythe manufacturer is to recommend a price, and hence share the information.",
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