https://macropaperwarehouse.com/authors/walter-beckert/Walter BeckertHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/competition-in-a-spatially-differentiated-product-market-with-negotiated-prices/https://macropaperwarehouse.com/papers/competition-in-a-spatially-differentiated-product-market-with-negotiated-prices/<p><strong>Research Question</strong></p> <p>How does individually negotiated pricing — where buyers make discrete choices among differentiated products and negotiate transaction-specific prices — affect market power and merger effects in oligopoly markets, and how do these effects differ from the uniform-pricing benchmark?</p> <p><strong>Data and Setting</strong></p> <p>The paper estimates the model using 13,788 transactions between the four main UK brick manufacturers and national house-building firms over 2003–2006. For each transaction (defined as a unique buyer-variety-destination-year combination), the data record the chosen product, negotiated price, production and delivery locations, volume, transport costs, and brick characteristics. The market is highly concentrated: four manufacturers held an 85% share of brick sales, with a two-firm concentration ratio of 0.60 and an HHI of 2,113. Spatial differentiation is a central feature — transport costs vary substantially by project location, and prices for the same brick product vary across the different projects of the same buyer depending on local competitive conditions.</p>