Alliances of buyers to negotiate input prices with suppliers are commonplace. Using pre- and post-alliances data on bottled water purchases, I develop a structural model of bilateral oligopoly to estimate the effects of three alliances formed by retailers on their bargaining power vis-à-vis manufacturers and retail prices paid by consumers. The results provide evidence of a countervailing buyer power effect that reduces retail prices by more than 7%. Exploring determinants of buyer power, I find that changes in the bargaining ability of retailers play an important role in the countervailing force of the alliances, which otherwise would not have been profitable.
