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Bargaining and fixed price offers: how online intermediaries are changing new car transactions

Thierry Pénard () and Michael Arnold ()

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Abstract: This paper develops a model of oligopolistic price competition to analyze the impact of online intermediaries such as Autobytel.com on the price setting process in the automobile market. The roles of dealer search costs, the fraction of buyers using the intermediary, the value of the item being sold, and heterogeneity in buyer bargaining abilities are explored. The model provides theoretical insights relevant to the empirical literature addressing the role that intermediaries like Autobytel play in online markets. For example, we present conditions under which the price offered through the intermediary is either higher or lower than offline (bargained) prices.

Keywords: Internet; bargaining; referral intermediary (search for similar items in EconPapers)
Date: 2007-06
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00169306
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Published in Review of Network Economics, De Gruyter, 2007, 6 (2), pp.134-160

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Journal Article: Bargaining and Fixed Price Offers: How Online Intermediaries are Changing New Car Transactions (2007) Downloads
Working Paper: Bargaining and Fixed Price Offers: How Online Intermediaries are Changing New Car Transactions (2007) Downloads
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