Competition in Posted Prices With Bargaining
In this paper we study price competition between firms when some consumers attempt tobargain while others buy at the public list or posted prices. Even though bargainers succeed innegotiating discounts off the list prices, their presence dampens competitive pressure in the marketby reducing the incentive to undercut a rivalâ€™s list price, thus raising all prices and increasingprofits. Welfare falls because of the uncertainty in the bargaining process, which generates somemisallocation of products to consumers. We also find that the bargainers facilitate collusion byreducing the market share that can be gained from a deviation.
|Date of creation:||14 Jan 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.economics.ox.ac.uk/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- repec:hal:wpaper:halshs-00590553 is not listed on IDEAS
- Gabriele Camera & Cemil Selcuk, 2009.
"Price Dispersion with Directed Search,"
Journal of the European Economic Association,
MIT Press, vol. 7(6), pages 1193-1224, December.
- Yongmin Chen & Robert W. Rosenthal, 1993.
"Asking Prices as Commitment Devices,"
0042, Boston University - Industry Studies Programme.
- Spector, David, 2007. "Bundling, tying, and collusion," International Journal of Industrial Organization, Elsevier, vol. 25(3), pages 575-581, June.
- Arnold, Michael A & Lippman, Steven A, 1998. "Posted Prices versus Bargaining in Markets with Asymmetric Information," Economic Inquiry, Western Economic Association International, vol. 36(3), pages 450-57, July.
- Wang, Ruqu, 1995. "Bargaining versus posted-price selling," European Economic Review, Elsevier, vol. 39(9), pages 1747-1764, December.
When requesting a correction, please mention this item's handle: RePEc:oxf:wpaper:639. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Wise)
If references are entirely missing, you can add them using this form.