THE INFLUENCE OF SUNK COSTS IN SUPPLIER-CUSTOMER RELATIONSHIPS WITH LARGE RETAILERS

This paper discusses the issues of retailer's listing fees and look at them through the prism of sunk costs. As large retailers enjoy a privileged position in the negotiations with its suppliers, with their market power, they lead the commercial cooperation through dominance of contractual relations. It also explains the reasons why suppliers agree to renegotiate mutual contracts, accept less favorable terms and continue to cooperate with the retailer, even though this seems to be disadvantageous. The paper explains by behavioral theory the reasons why suppliers behave irrationally and which parameters are entering in their decision model. Listing fees are seen in this paper as irrecoverable investment, which influences future investments, getting affected by the effect "throwing good money after bad".