Study On Impact Mechanisms Of Industrial Chain Environment On Countervailing Power

In recent years, buyers’ countervailing power theory has attracted considerable attention in the area of industrial organization. Base on the basic logic of buyer’s countervailing power theory and the new industrial organization theory, firms’strategic behavior, environmental factors of industrial chain and the final markets are introduced to investigate impact mechanisms of industrial environmental factors on countervailing power. In order to solve the limitations of existing countervailing power formation mechanism and influence theories, a systematic study of this issue is conducted by analyzing from perspectives including impacts of upstream environmental factors, impact of downstream environmental factors and impact of market environmental factors. The focus of this research is to study countervailing power formation mechanisms under mentioned backgrounds. This paper is a study on the relationship among strategic behavior, industrial chain environmental factors and industrial chain efficiency of vertical related firms, which is a basic theoretical study of industrial organization. This study is also an extension of the existing countervailing power theory, which can not only enhance industrial economy phenomenon explanation ability of the theory, but also provide theoretical basis for firms’ strategy development and industrial regulation policies.The core content of this study reveals impact mechanisms of industrial chain factors on downstream firms’ countervailing power, as well as countervailing power’s impact on social welfare under various industrial environments. The results show that, downstream firms’countervailing power is formed by strategic behaviors conduct by downstream firms using industrial internal environmental factors or final market environmental factors, but will be constrained by outside options of up and downstream firms, industrial chain internal environmental factors and final market environmental factors. In addition, the welfare effects of downstream firms’ countervailing power is uncertain, which is affected by many factors.Specifically, this paper completed the following five tasks:(1) The core content and limitations of existing countervailing power formation and influence theory is analyzed in-depth. After analyzing the concept of countervailing power, the core content of existing countervailing power theory is summarized studied from the perspective of countervailing power formation mechanism and the efficiency influence of countervailing power. Based on the conclusions obtained, limitations and theory development directions of current countervailing power studies are analyzed too.(2) The research framework of industrial chain environmental factors impact mechanisms on countervailing power is proposed. Based on the classification of industrial chain environmental factors in this study, factors concerned in this research are analyzed. Then combined with a description of research methods, the main content of the research framework are discussed individually.(3) Impact mechanisms of upstream industrial environmental factors on countervailing power are revealed. Outside options of downstream firms are introduced to the vertical relationships. The focus of the analysis is on the impact mechanism of upstream competitive firms’supply function slope and number on countervailing power. Under this background, social welfare effects of countervailing power are studied as well.(4) Impact mechanisms of downstream industrial environmental factors on countervailing power are demonstrated. Competing firms of the leading downstream firm are introduced. And impact mechanism of these competitive firms’ supply function slope and number on countervailing power is analyzed. Also, social welfare effects of countervailing power are studied under this background.(5) The promoting effect of final market environmental factors on countervailing power formation is analyzed. After discussing consumer preferences’ economic characteristics, consumer preferences differences among products and separate markets are introduced into the discussion of countervailing power formation mechanism study. This study demonstrates the basic principles of how consumer preferences factor is used by downstream firms in their countervailing power formation, and this behavior’s influence on competition structure and social welfare.