countervailing power


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countervailing power

the ability of large buyers to offset the market power of huge suppliers as in BILATERAL OLIGOPOLY. Large buyers usually have the upper hand in a vertical market chain (for example, multiple retailers buying from food manufacturers) because, unless suppliers collude (see COLLUSION), a large buyer is able to play one supplier off against another and obtain favourable discounts on bulk purchases. Provided that competition is strong in final selling markets, countervailing power can play an important role in checking monopolistic abuse.

The economist J. K. GALBRAITH uses the phrase ‘countervailing power’ in a slightly different way to refer to the growth of trade unions and consumer groups in response to the growth of large firms.

References in classic literature ?
Palfrey was capable of horse-whipping a too rash pretender to his daughter's hand; and, moreover, he had three tall sons: it was clear that a suitor would be at a disadvantage with such a family, unless travel and natural acumen had given him a countervailing power of contrivance.
The absence of a countervailing power enabled Washington to launch invasions of Afghanistan in 2001 in the aftermath of 9/11 and of Iraq in 2003 without any UN sanction.
On top of that, you had countervailing power in the form of labor unions and local banks and farm cooperatives and other groups whose voice in politics counteracted and balanced the voices of big business and the big banks.
But as I have also argued before, the need exists for a countervailing power to check the Duterte administration's excesses.
20) In other words, when a buyer exerts countervailing power against a supplier with market power, the overarching goal should be consumer welfare, not supplier welfare.
WBA's added scale could provide some countervailing power in its negotiations over network access and reimbursement rates, he added.
It found that the bidding nature of the markets, the presence of other large competitors, the relatively low barriers to entry, and the significant countervailing power of media vendors will ensure a level playing field in all the affected markets after the merger.
Popularised by Galbraith (1956), countervailing power has come to mean a variety of mechanisms that counter the power of dominant practices and paradigms.
These examples show how cooperatives are organized and grow to enable farmers to exercise countervailing power and compete.
When the downturn came, there was no countervailing power in Brussels to offset the effects of the recession in the countries most hit by the crisis.
In addition, given the proliferation of technology in this field, Valeo s limited market shares on completion of the project, and the significant countervailing power of vehicle producers, the Commission was able to rule out the risk of any excessive distortion of competition.