Abstract: In this paper,we present a simple model where a national retailer competes with a local retailer in m>1 markets a La Cournot fashion. When the national firm is a private firm,an increase in its buying power increases its profit but reduces consumer surplus and social welfare.The profits of the upstream supplier and the local firms depend on both the state share of the SOE and the degree of buying power of the national retailer. Furthermore,when the national firm is a partially state-owned enterprise (SOE),a rise in its buying power benefits the national retailer itself,consumers and society as a whole,but hurts the up stream supplier and the local firms.

Key words: Cournot competition, buying power, state-owned enterprise(SOE), social welfare