Bargaining, Search, and Price Dispersion: Evidence from the Live Hogs Market
AbstractUsing unique panel data on individual transactions between buyers and sellers in the spot market for live hogs, we found a large degree of intra-day price dispersion. Motivated by this empirical puzzle, we offer an explanation which is rooted in the bargaining with search theory. We formulate three hypotheses involving the role of farmersâ€™ search cost, bargaining partiesâ€™ patience, and asymmetric information that we believe can explain the observed phenomenon. Empirical analysis shows strong support for all three of the stated theoretical predictions, indicating that the bargaining with search theory explains at least 31 percent of the observed intra-day price variation in this market.
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Bibliographic InfoArticle provided by Northeastern Agricultural and Resource Economics Association in its journal Agricultural and Resource Economics Review.
Volume (Year): 39 (2010)
Issue (Month): 3 (October)
intra-day price dispersion; bargaining theory; search cost; asymmetric information; Demand and Price Analysis;
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- Lisi, Gaetano, 2012.
"Can the Mortensen-Pissarides model match the housing market facts?,"
36769, University Library of Munich, Germany.
- Gaetano Lisi, 2013. "Can the Mortensen-Pissarides Model Match the Housing Market Facts?," Journal of Economics and Econometrics, Economics and Econometrics Research Institute (EERI), Brussels, vol. 56(2), pages 78-92.
- Gaetano Lisi, 2013. "Can the Montersen-Pissarides Model Match the Housing Market Facts?," Working Papers 1312, Department of Applied Economics II, Universidad de Valencia.
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