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Transactions that did not happen and their influence on prices

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  • Kirman, Alan P.
  • Härdle, Wolfgang
  • Schulz, Rainer
  • Werwatz, Axel

Abstract

This paper studies data from the wholesale fruit and vegetables market in Marseille. The special feature of the data is that we have details of counteroffers to the prices that were proposed by the seller even when no transaction took place. Each offer, counteroffer and refusal conveys information to the two parties concerned about the state of the market since no prices are posted and there is ignorance of the total quantities available of each product. We examine the evolution of prices during the day and analyse the relation between the final price struck and the proposals of the two parties. We show what happens to the seller's first price and to the transaction price as the seller revises his idea of the distribution of the buyer's reservation price. We show that periods with no buyer refusals, of offers or bargaining with no transaction will lead to a revision of the seller's first price. More importantly the sharing of the surplus moves in the buyer's favour during the day. These presumptions are then shown to be confirmed by our data set. --

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Bibliographic Info

Paper provided by Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes in its series SFB 373 Discussion Papers with number 2002,45.

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Date of creation: 2002
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Handle: RePEc:zbw:sfb373:200245

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Keywords: Bargaining; Markets;

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References

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  1. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
  2. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, Elsevier, vol. 29(2), pages 265-281, April.
  3. Michael Rothschild, 1974. "Searching for the Lowest Price When the Distribution of Prices Is Unknown: A Summary," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 1, pages 293-294 National Bureau of Economic Research, Inc.
  4. Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 3(3), pages 23-36, Summer.
  5. Weisbuch, Gerard & Alan Kirman & Dorothea K. Herreiner, 1996. "Market Organization," Discussion Paper Serie B, University of Bonn, Germany 391, University of Bonn, Germany.
  6. Rothschild, Michael, 1974. "Searching for the Lowest Price When the Distribution of Prices Is Unknown," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(4), pages 689-711, July/Aug..
  7. McAfee R. Preston & Vincent Daniel, 1993. "The Declining Price Anomaly," Journal of Economic Theory, Elsevier, Elsevier, vol. 60(1), pages 191-212, June.
  8. Hardle, Wolfgang & Kirman, Alan, 1995. "Nonclassical demand : A model-free examination of price-quantity relations in the Marseille fish market," Journal of Econometrics, Elsevier, Elsevier, vol. 67(1), pages 227-257, May.
  9. Gastwirth, Joseph L, 1976. "On Probabilistic Models of Consumer Search for Information," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 90(1), pages 38-50, February.
  10. Pezanis-Christou, P., 1996. "Sequential Auctions with Supply Uncertainty," Papers, New South Wales - School of Economics 96/15, New South Wales - School of Economics.
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Cited by:
  1. Joshua Sherman & Avi Weiss, 2012. "Price Response, Asymmetric Information, and Competition," Working Papers, Bar-Ilan University, Department of Economics 2012-13, Bar-Ilan University, Department of Economics.
  2. Franck Galtier & François Bousquet & Martine Antona & Pierre Bommel, 2012. "Markets as communication systems," Journal of Evolutionary Economics, Springer, Springer, vol. 22(1), pages 161-201, January.
  3. Sonia Moulet & Juliette Rouchier, 2009. "The influence of seller learning and time constraints on sequential bargaining in an artificial perishable goods market," Working Papers halshs-00353505, HAL.
  4. Juliette Rouchier, 2013. "The Interest of Having Loyal Buyers in a Perishable Market," Computational Economics, Society for Computational Economics, Society for Computational Economics, vol. 41(2), pages 151-170, February.
  5. Giulioni, Gianfranco & Bucciarelli, Edgardo, 2011. "Agents’ ability to manage information in centralized markets: Comparing two wholesale fish markets," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 80(1), pages 34-49.

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