Buyer Power and Product Innovation : Empirical Evidence from the German Food Secto

 Substantial increases in retail concentration (particularly in Europe) raise concerns about the welfare implications for consumers. In a formal model, we argue that retailer market power reduces upstream firms incentives to introduce new products. On the basis of a survey of firms in German food manufacturing, the results of a negative binomial regression model supports the proposition of a detrimental effect  of retailer market power on product innovations. This effect is mitigated if manufacturing firms also have some market power (countervailing  power).  Innovations are positively related to firm’s market share in food manufacturing. 

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