A Larger Slice or a Larger Pie? An Empirical Investigation of Bargaining Power in the Distribution Channel

Presentation

Based on Marketing Science article  Marketing Science, Vol. 29(1), 57-74

pdf Draganska Presentation.pdf

Teaching Objective

Learn how to empirically determine bargaining power of manufacturers and retailers in the distribution channel. We use the Nash bargaining solution to determine wholesale prices and thus to identify how margins are split in the channel. The strength of this work is that it introduces a realistic description of how manufacturers and retailers interact and how their profitability is affected. Thus we develop insights regarding the determinants of channel profitability and the relative power of the channel.

Keywords: Bargaining, Bargaining power, Power shift in the retail channel, Competitive Strategy

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