Get access

LISTING PRICES AS SIGNALS OF QUALITY IN MARKETS WITH NEGOTIATION

Authors


  • *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.

Abstract

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.

Get access to the full text of this article

Ancillary