EconPapers    
Economics at your fingertips  
 

Posted Prices versus Bargaining in Markets with Asymmetric Information

Michael Arnold () and Steven A Lippman

Economic Inquiry, 1998, vol. 36, issue 3, 450-57

Abstract: A search model is employed to analyze the choice between posting a price and bargaining for the seller of an asset who is imperfectly informed about both buyer valuations and buyer bargaining abilities. A mean preserving increase in risk of buyer valuations is relevant, and beneficial, to the seller; however, only the mean, and not the distribution, of buyer bargaining abilities is relevant. If the mean of buyer bargaining abilities is sufficiently high, the seller utilizes a posted price. Interestingly, social welfare decreases in the mean of buyer bargaining abilities; while an increase in the mean of buyer bargaining abilities reduces expected search costs, it also results in misallocation of the good because the seller is less discriminating. Copyright 1998 by Oxford University Press.

Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (30) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:ecinqu:v:36:y:1998:i:3:p:450-57

Ordering information: This journal article can be ordered from
http://www.oup.co.uk/journals

Access Statistics for this article

Economic Inquiry is currently edited by Preston McAfee

More articles in Economic Inquiry from Western Economic Association International Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press () and Christopher F. Baum ().

 
Page updated 2021-06-15
Handle: RePEc:oup:ecinqu:v:36:y:1998:i:3:p:450-57