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What is reciprocal buying?  

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Walter Fischer eNotes educator | Certified Educator

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Reciprocal buying refers to an agreement between two or more companies to purchase each other's products, often irrespective of whether such purchases represent the lowest cost or best value to the buyers. Such arrangements often draw the attention of government regulators because they do not allow for the introduction into the equation of additional companies whose products may be more cost-effective but whose exclusion from the arrangement condemns such companies from being able to take part. As the Department of Justice monitors the business world for threats to the free market competition that provides the foundation of the nation's economy, any arrangement between two or more companies that appears to reduce competition is scrutinized for any possible transgression of federal regulations pertaining to trusts and oligopolies. 

Reciprocal buying arrangements can be confusing on the surface, as one business is usually a supplier to the other, such as when Company A sells parts to Company B that are used in the latter company's manufacturing process. The potential for a reciprocal buying arrangement would, consequently, appear minimal. For better or for worse, however, such arrangements can exist if Company A agrees to buy from Company B the final manufactured product or some other good or service Company B provides. So-called offset arrangements, in which one company agrees to purchase an unrelated good or service from another company as a way of ensuring reciprocity in their relationship--in other words, each company buys something the other has to sell--do occur fairly regularly on an international level. Country X helps a company within its border sell its...

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