Buyer Power and Non-Binding Retail Price Recommendations

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.