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Ordered Bargaining

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  • Alexander Raskovich

    (Economic Analysis Group, Antitrust Division, Department of Justice)

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    Abstract

    When buyers choose the order in which they bargain with suppliers of known characteristics, prices are determined jointly by bargaining power and competitive intensity (the outside option to bargain with rival suppliers). Bargaining power becomes less important to the outcome as competition intensifies; prices fall to marginal cost in the limit. With positive visit costs and weak competition, some buyer power is necessary for trade. Incomplete buyer power may lead to inefficient choice of bargaining order. The robustness of ordered bargaining to the possibility of price posting and auctions, and welfare properties of these alternative pricing institutions are also explored.

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    File URL: http://www.justice.gov/atr/public/eag/221882.pdf
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    Bibliographic Info

    Paper provided by Department of Justice, Antitrust Division in its series EAG Discussions Papers with number 200610.

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    Length: 32 pages
    Date of creation: Sep 2006
    Date of revision:
    Handle: RePEc:doj:eagpap:200610

    Contact details of provider:
    Postal: Department of Justice Antitrust Division 450 Fifth Street NW Washington, DC 20530
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    Web page: http://www.justice.gov/atr/
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