Bargaining at Retail Stores: Evidence from Vienna

Sandro Shelegia () and Joshua Sherman ()
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Sandro Shelegia: Department of Economics and Business, Universitat Pompeu Fabra, Barcelona 08005, Spain; Barcelona School of Economics, Barcelona 08005, Spain; CEPR, London EC1V 0DX, United Kingdom
Joshua Sherman: Charles River Associates, Chicago, Illinois 60606; Kellogg School of Management and Department of Economics, Northwestern University, Evanston, Illinois 60208

Management Science, 2022, vol. 68, issue 1, 27-36

Abstract: In the West, where posted prices are the norm, it is uncommon to observe consumers receive discounts below the posted price. Nevertheless, we find that when stores are asked, a discount is granted approximately 40% of the time, with a median discount percentage of 10%. Discounts are more likely to be offered by small-scale firms, for higher-priced products, and for nonsale items. More generally, differences in price delegation behavior across firm types serve as an indicator that monitoring costs and employee skills are important drivers of bargaining behavior.

Keywords: bargaining; posted price; price delegation; monitoring; audit study (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:1:p:27-36

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