Transactions that did not happen and their influence on prices

This paper studies data from the wholesale fruit and vegetables market in Marseille. The special feature of the data is that we have details of counteroffers to the prices that were proposed by the seller even when no transaction took place. Each offer, counteroffer and refusal conveys information to the two parties concerned about the state of the market since no prices are posted and there is ignorance of the total quantities available of each product. We examine the evolution of prices during the day and analyse the relation between the final price struck and the proposals of the two parties. We show what happens to the seller's first price and to the transaction price as the seller revises his idea of the distribution of the buyer's reservation price. We show that periods with no buyer refusals, of offers or bargaining with no transaction will lead to a revision of the seller's first price. More importantly the sharing of the surplus moves in the buyer's favour during the day. These presumptions are then shown to be confirmed by our data set.