Bargaining at Retail Stores: Evidence from Vienna

Joshua Sherman and Sandro Shelegia

No 1032, Working Papers from Barcelona School of Economics

Abstract: The optimality of trading mechanisms has long been a subject of interest in economics, yet there exists little empirical evidence regarding which mechanisms of trade are deployed in practice. Our audit study of retail stores in Vienna documents previously unknown and important facts. Stores agree to a discount off of the posted price approximately 40% of the time. Discounts are more likely to be granted by small-scale firms, for higher-priced products, and for non-sale items. Our findings are consistent with the predictions of a principle-agent model in which a firm decides whether to augment posted prices with bargaining concessions.

Keywords: bargaining; posted price; trading mechanism; audit study (search for similar items in EconPapers)
JEL-codes: C78 C93 D12 L81 (search for similar items in EconPapers)
Date: 2018-03
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Related works:
Working Paper: Bargaining at Retail Stores: Evidence from Vienna (2019)
Working Paper: Bargaining at Retail Stores: Evidence from Vienna (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1032

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