Recent trade practices decisions in Australia emphasise a structural approach to market power. Modern economic analysis, however, highlights situations where firms that currently lack 'structural' market power may engage in strategic behaviour aimed at altering market structure. Such firms have...

If buyers can choose to initiate bargaining with a seller, how does this alter the price that the seller 'posts' in the market? And does the option of bargaining raise or lower expected welfare?This paper develops a simple model to answer these questions. With a single seller, the potential for...