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The Matching Problem (and Inventories) in Private Negotiation

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  • Christopher T. Bastian
  • Lance B. Gittings

Abstract

This study examines laboratory market outcomes under alternative matching risk scenarios and advance production. Limited access and/or asymmetry in the number of buyers and sellers cause a matching problem. When sellers hold inventory before sale and there is buyer concentration, prices are about 23% below the competitive level and close to the predicted monopsony price. The bargaining advantage shifts to buyers in this market environment. Sellers can benefit by creating alliances or cooperatives to increase their bargaining position for price and overcome poor access to buyers. Copyright 2007, Oxford University Press.

Suggested Citation

  • Christopher T. Bastian & Lance B. Gittings, 2007. "The Matching Problem (and Inventories) in Private Negotiation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 1073-1084.
    • Handle: RePEc:oup:ajagec:v:89:y:2007:i:4:p:1073-1084
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.01033.x
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    Cited by:

    1. Bastian, Christopher T. & Jones Ritten, Chian & Feuz, Bridger & Nagler, Amy M. & Smutko, Steven, 2018. "Can Producers Bargain for Better Prices? Implications from Wyoming Focus Groups," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2018.
    2. Nagler, Amy M. & Menkhaus, Dale J. & Bastian, Christopher T. & Ehmke, Mariah D. & Coatney, Kalyn T., 2013. "Subsidy Incidence in Factor Markets: An Experimental Approach," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 45(1), pages 17-33, February.
    3. Karsyn Lamb & Kristiana Hansen & Christopher Bastian & Amy Nagler & Chian Jones Ritten, 2019. "Investigating Potential Impacts of Credit Failure Risk Mitigation on Habitat Exchange Outcomes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 815-842, July.
    4. Phillips, Owen R. & Nagler, Amy M. & Menkhaus, Dale J. & Huang, Shanshan & Bastian, Christopher T., 2014. "Trading partner choice and bargaining culture in negotiations," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 178-190.
    5. Menkhaus, Dale J. & Bastian, Christopher T. & Ehmke, Mariah D., 2008. "The Evolving Agricultural Marketplace: Selected Results and Implications for the West from the Laboratory," Western Economics Forum, Western Agricultural Economics Association, vol. 7(2), pages 1-8.
    6. Chian Jones Ritten & Christopher Bastian & Owen Phillips, 2021. "The relative effectiveness of law enforcement policies aimed at reducing illegal trade: Evidence from laboratory markets," PLOS ONE, Public Library of Science, vol. 16(11), pages 1-20, November.
    7. Ehmke, Mariah D. & Nagler, Amy M. & Menkhaus, Dale J. & Bastian, Christopher T. & Young, C. Edwin, 2010. "Is Agricultural Policy Decoupling against Human Nature? Experimental Evidence of Fairness Expectations’ Contributions to Payment Incidence," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61645, Agricultural and Applied Economics Association.
    8. Phillips, Owen R. & Menkhaus, Dale J., 2010. "The culture of private negotiation: Endogenous price anchors in simple bilateral bargaining experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 705-715, December.

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