"MAY I PLEASE PAY A HIGHER PRICE?": SUSTAINING NON-SIMULTANEOUS EXCHANGE THROUGH FREE DISPOSAL OF BARGAINING ADVANTAGE
The issue of whether or not trade can be sustained when exchange is non-simultaneous is addressed. An environment in which a buyer is exposed to the possibility that a seller will not deliver an item which has been paid for is examined. Situations of this nature often arise when consumer-to-consumer trade is negotiated via the internet. Repeated interaction between a single seller and a single buyer is modelled, assuming each has incomplete information about the type of their prospective trading partner. It is possible for an agent to be better off with less relative bargaining power. Thus, if an agent can reduce his own relative bargaining power, he may choose to do so.
Non-simultaneous exchange, transactional relationships, internet transactions, market structure and pricing, JEL Classification: C70, JEL Classification: D40, JEL Classification: L14
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