*I would like to thank Paul Anglin, Michael Arnold, Dan Bernhardt, Yongmin Chen, Michelle Eggleston, Alan Gunderson, John Hartwick, Ken Hendricks, George Mailath, Bob Rosenthal, Guofu Tan, Quan Wen, the Editor and two anonymous referees for their helpful comments. This research is supported by the Social Sciences and Humanities Research Council of Canada.
LISTING PRICES AS SIGNALS OF QUALITY IN MARKETS WITH NEGOTIATION*
Version of Record online: 27 JUN 2011
© 2011 The Author. The Journal of Industrial Economics © 2011 Blackwell Publishing Ltd and the Editorial Board of The Journal of Industrial Economics
The Journal of Industrial Economics
Volume 59, Issue 2, pages 321–341, June 2011
How to Cite
WANG, R. (2011), LISTING PRICES AS SIGNALS OF QUALITY IN MARKETS WITH NEGOTIATION. The Journal of Industrial Economics, 59: 321–341. doi: 10.1111/j.1467-6451.2011.00452.x
- Issue online: 27 JUN 2011
- Version of Record online: 27 JUN 2011
We analyze markets where a buyer may pay the listing price or negotiate. We show that listing prices can signal quality to attract the right type of buyers. Prices are lower without quality uncertainty or without some of the lower qualities. In equilibrium, higher qualities/prices induce more bargaining, and thus more expensive goods are sold more often through bargaining.