Relating Buyer/Seller Power to Market Structure

Abstract

Some capital‐intensive manufacturing businesses pose particular problems to market planners because the profit margins are often highly cyclical as seller capacity utilisation changes through the four‐year business cycle and may also be heavily affected by new entrants on the seller side or the emergence of strong buyers. This article examines how margins are related to market structure for Strategic Business Units in the PIMS database. Having identified that margins are related to some descriptions of market structure, it explores how the margin behaviour of capital‐intensive businesses can be modelled as changes in the relative power of buyers and sellers as the capacity utilisation of the sellers changes.

Citation

Cowley, P.R. (1985), "Relating Buyer/Seller Power to Market Structure", Marketing Intelligence & Planning, Vol. 3 No. 4, pp. 16-24. https://doi.org/10.1108/eb045718