Bargaining with Sequential Buyers under Incomplete Information

Roman Inderst

No 99-58, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: We consider bargaining between a seller and a buyer with private information about his valuation. We introduce the novel feature that with some probability a new buyer may visit the seller's shop each period, which grants the seller the option to switch to a new trading partner. We analyze the model under a stationarity restriction on buyers' strategy. If the distribution of valuations has no interior gap, the Coase conjecture continues to hold. This stands in contrast to known results for the case where the seller has to quit bargaining with the old buyer if he decides to search for a new trading partner.

Pages: 18 pages
Date: 1999-04-13
Note: Financial Support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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