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What affects customer success when bargaining for a new car? Some empirical evidence

Author

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  • Azar, Ofer H.

Abstract

Data about 233 new car models were collected, and a measure of customer success in bargaining for a new car (alpha) was created by computing the ratio between the discount received on the manufacturer's suggested retail price (MSRP) and the negotiable range (MSRP−dealer's car cost). One hypothesis was that customers who purchase more expensive cars succeed less in bargaining because of their higher time value. A second hypothesis was that a positive correlation between the negotiable range and alpha should exist, because of either customer incentives to bargain or dealer's bargaining strategy. Both hypotheses were supported by the data.

Suggested Citation

  • Azar, Ofer H., 2012. "What affects customer success when bargaining for a new car? Some empirical evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(1), pages 26-30.
  • Handle: RePEc:eee:soceco:v:41:y:2012:i:1:p:26-30
    DOI: 10.1016/j.socec.2011.10.007
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    More about this item

    Keywords

    Car dealers; Bargaining; Negotiations; Automobile industry; Consumer behavior;

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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