The Impatient Salesperson and the Delegation of Pricing Authority

Edward Lazear

No 20529, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Sales agents are impatient relative to owners. If a good fails to sell, the owner still retains possession of that good and can enjoy its services, whereas the agent receives nothing. As a consequence, sales agents prefer a lower price than does an owner. Owners are therefore reluctant to delegate pricing authority to sales agents even when the agents have superior market information. Pricing authority is more likely to be delegated to agents when the owner lacks monopoly power and sells competitively and when the good is a non-durable. Agents who are given pricing authority are less likely to be paid commissions and more likely to be on a straight salary.

JEL-codes: D4 M5 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-com, nep-cta and nep-mic
Note: LS IO
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Published as Edward P. Lazear, 2015. "The impatient salesperson and the delegation of pricing authority," Research in Economics, vol 69(1), pages 63-74.

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Journal Article: The impatient salesperson and the delegation of pricing authority (2015)
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