Financial support from Deakin University is gratefully acknowledged. Some of this research took place while Feltovich was at University of Aberdeen. We thank three anonymous referees, Richard Dutu, Simon Loertscher, and participants at several conferences and workshops for helpful suggestions and comments. Please address correspondence to Nick Feltovich, Department of Economics, Monash University, Clayton, VIC 3800, Australia. E-mail: email@example.com.
DIRECTED SEARCH, COORDINATION FAILURE, AND SELLER PROFITS: AN EXPERIMENTAL COMPARISON OF POSTED PRICING WITH SINGLE AND MULTIPLE PRICES
Article first published online: 17 JUL 2013
© (2013) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
International Economic Review
Volume 54, Issue 3, pages 873–884, August 2013
How to Cite
ANBARCI, N. and FELTOVICH, N. (2013), DIRECTED SEARCH, COORDINATION FAILURE, AND SELLER PROFITS: AN EXPERIMENTAL COMPARISON OF POSTED PRICING WITH SINGLE AND MULTIPLE PRICES. International Economic Review, 54: 873–884. doi: 10.1111/iere.12020
- Issue published online: 17 JUL 2013
- Article first published online: 17 JUL 2013
- Manuscript Revised: AUG 2012
- Manuscript Received: FEB 2011
- Deakin University
We experimentally examine posted pricing and directed search. In one treatment, capacity-constrained sellers post fixed prices, which buyers observe before choosing whom to visit. In the other, firms post both “single-buyer” (applied when one buyer visits) and “multibuyer” (when multiple buyers visit) prices. We find, based on a 2 × 2 (two buyers and two sellers) market and a follow-up experiment with 3 and 2 × 3 markets, that multibuyer prices can be lower than single-buyer prices or prices in the one-price treatment. Also, allowing the multibuyer price does not affect seller profits and increases market frictions.