The impatient salesperson and the delegation of pricing authority

Edward Lazear

Research in Economics, 2015, vol. 69, issue 1, 63-74

Abstract: Sales agents are impatient relative to owners. If a good fails to sell, the owner still retains possession of that good and can enjoy its services, whereas the agent receives nothing. As a consequence, sales agents prefer a lower price than does an owner. Owners are therefore reluctant to delegate pricing authority to sales agents even when the agents have superior market information. Pricing authority is more likely to be delegated to agents when the owner lacks monopoly power and sells competitively and when the good is a non-durable. Agents who are given pricing authority are less likely to be paid commissions and more likely to be on a straight salary.

Keywords: Pricing; Delegation of authority; Agents; Principals; Reserve prices; Reservation values (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (3)

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Working Paper: The Impatient Salesperson and the Delegation of Pricing Authority (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:69:y:2015:i:1:p:63-74

DOI: 10.1016/j.rie.2014.10.001

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