 Price bargaining and quantity bonus in developing economiesJ Atsu Amegashie and
Joe Amoako-Tuffour
No 4, Royal Economic Society Annual Conference 2003 from Royal Economic Society Abstract: Consider a seller and a buyer bargaining over the price of an agricultural product in a developing economy. Think of the following common bargaining deal: the seller tries to persuade the buyer to accept a higher price and, in return, give the buyer a deal (i.e., extra units of the product for free). Why doesnÕt the seller just give the buyer a lower price instead of the deal? This paper provides an answer to this question. Although price can apparently replicate the use of quantity bonus (i.e., the free extra units), we argue that price bargaining per se limits the extent to which price can be used. Such bargaining deals are used because the seller can post them but cannot post prices. We explain why these sellers can post quantity bonuses. We give a condition under which the quantity bonus can replicate the equilibrium that would have obtained if the seller could directly post the price. We offer here a theory of bargaining deals. Keywords: price bargaining; non-price competition; posted prices; quantity bonus (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ecj:ac2003:4 Access Statistics for this paper More papers in Royal Economic Society Annual Conference 2003 from Royal Economic Society Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.