Introductory Price as a Signal of Cost in a Model of Repeat Business
This paper analyzes a bargaining model with incomplete information in which the time between offers is an endogenous stra tegic variable. It finds equilibria involving a delay to agreement th at is attributable to the use of strategic time delay by bargainers t o signal their relative strength. Under some specifications of the pa rameters, delay is present in the unique sequential equilibrium whose beliefs satisfy one intuitive restriction. This delay does not vanis h as the minimal time between offers becomes small. Copyright 1987 by The Review of Economic Studies Limited.
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Volume (Year): 54 (1987)
Issue (Month): 3 (July)
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- Bagwell, Kyle, 1987.
"Introductory Price as a Signal of Cost in a Model of Repeat Business,"
Review of Economic Studies,
Wiley Blackwell, vol. 54(3), pages 365-84, July.
- Kyle Bagwell, 1987. "Introductory Price as a Signal of Cost in a Model of Repeat Business," Discussion Papers 722, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Green, Edward J & Porter, Robert H, 1984.
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- Edward J Green & Robert H Porter, 1997. "Noncooperative Collusion Under Imperfect Price Information," Levine's Working Paper Archive 1147, David K. Levine.
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- Bagwell, Kyle, 1990.
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Elsevier, vol. 8(2), pages 207-223, June.
- Kyle Bagwell, 1986. "Informational Product Differentiation as a Barrier to Entry," Discussion Papers 711, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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Cowles Foundation Discussion Papers
709, Cowles Foundation for Research in Economics, Yale University.
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Econometric Society, vol. 50(4), pages 863-94, July.
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"Advertising and Limit Pricing,"
729, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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- Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-59, September.
- Irvine, F Owen, Jr, 1981. "An Optimal Middleman Firm Price Adjustment Policy: The "Short-Run Inventory-Based Pricing Policy."," Economic Inquiry, Western Economic Association International, vol. 19(2), pages 245-69, April.
- Shilony, Yuval, 1977. "Mixed pricing in oligopoly," Journal of Economic Theory, Elsevier, vol. 14(2), pages 373-388, April.
- Salop, Steven, 1977. "The Noisy Monopolist: Imperfect Information, Price Dispersion and Price Discrimination," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 393-406, October.
- Sobel, Joel, 1984. "The Timing of Sales," Review of Economic Studies, Wiley Blackwell, vol. 51(3), pages 353-68, July.
- Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
- Conlisk, John & Gerstner, Eitan & Sobel, Joel, 1984. "Cyclic Pricing by a Durable Goods Monopolist," The Quarterly Journal of Economics, MIT Press, vol. 99(3), pages 489-505, August.
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