In many markets, the price of a good or service is flexible. Buyers can either buy at the posted price or attempt to negotiate a lower price. A seller's decision about whether to allow flexible prices and subsequent outcome in these types of flexible price markets depends, in large part, on...

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...

This paper develops and estimates a search and bargaining model designed to measure the welfare loss associated with frictions in oligopoly markets with negotiated prices. We use the model to quantify the consumer surplus loss induced by the presence of search frictions in the Canadian mortgage...

We examine the implications of different contractual forms for welfare as well as for firms’ profits in a framework in which a vertically integrated firm sells its good to an independent downstream firm. Under downstream Bertrand competition, the standard result of the desirability of two-part...