IDEAS home Printed from https://ideas.repec.org/p/tut/cremwp/200704.html
   My bibliography  Save this paper

Bargaining and posted prices: what does the Internet change ?

Author

Listed:
  • Michael A. Arnold

    (Dpt of Economics, U. Delaware)

  • Thierry Pénard

    (CREM – CNRS)

Abstract

The Internet has introduced a variety of online buying services that expand the reach of sellers and reduce search costs for buyers. In markets in which traditional outlets tend to establish prices through bargaining, these online intermediaries have also altered the price setting process. Perhaps the most well known example is Autobytel.com which provides referral services in the automobile market. By using Autobytel, a buyer can obtain a posted price as an alternative to bargaining with a car dealer ship. To understand the effect of online referral systems on the price setting process, we construct a theoretical model of oligopolistic price competition in which one dealership has an exclusive contract with a referral intermediary. We show that posted prices offered through the referral system are not necessarily lower than offline prices (bargained prices). Our model provides theoretical insights relevant to results in the empirical literature addressing the role that Autobytel and other infomediaries play in online markets.

Suggested Citation

  • Michael A. Arnold & Thierry Pénard, 2007. "Bargaining and posted prices: what does the Internet change ?," Economics Working Paper Archive (University of Rennes & University of Caen) 200704, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    • Handle: RePEc:tut:cremwp:200704
    as

    Download full text from publisher

    File URL: https://ged.univ-rennes1.fr/nuxeo/site/esupversions/0e5c3e7c-c10e-45ee-b334-e7a78bebe05a
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    online markets; e-commerce; intermediary; autobytel; pricing;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
    • L89 - Industrial Organization - - Industry Studies: Services - - - Other

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tut:cremwp:200704. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: GERMAIN Lucie (email available below). General contact details of provider: https://edirc.repec.org/data/crmrefr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.