The welfare consequences of the exercise of buyer power

This report considers the social welfare effects resulting from the exercise of buyer power - whereby a firm or group of firms obtain from suppliers more favourable terms than those available to other buyers or would otherwise be expected under normal competitive conditions. It seeks to synthesise and extend existing theory on monopsony and buyer power, so as to identify the conditions where detrimental effects are likely to dominate benign social welfare effects, and vice versa, with the aim of providing practical guidance to competition authorities seeking to develop appropriate responses to the presence of buyer power.