Which of the following features about a buyer indicates that the buyer has high bargaining power?

when the buyer faces high switching costs

when the buyer cannot credibly threaten to backwardly integrate into the industry

when the buyer cannot purchase specific products from other sellers

when the buyer operates in an industry where products are undifferentiated

Question

Business

Mara

21 August, 18:20

Which of the following features about a buyer indicates that the buyer has high bargaining power?

when the buyer faces high switching costs

when the buyer cannot credibly threaten to backwardly integrate into the industry

when the buyer cannot purchase specific products from other sellers

when the buyer operates in an industry where products are undifferentiated

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Answers (1)

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Kendra Rios · Answer 1

when the buyer operates in an industry where products are undifferentiated

Explanation:

When a buyer can switch easily between suppliers and the goods are similar (not differentiated), then the buyer has higher bargaining power. The smaller the number of buyers, the more bargaining power they will have. A monopsony is the extreme case where one large buyer controls the market, e. g. a large factory in a small town can set the wages of its employees.