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Title: Bargaining at Retail Stores: Evidence from Vienna

Author(s): Sandro Shelegia and Joshua Sherman

Publication Date: October 2019

Keyword(s): Audit Study, Bargaining, posted price and Trading Mechanism

Programme Area(s): Industrial Organization

Abstract: In the West, where posted prices are the norm, it is uncommon to observe consumers receive discounts below the posted price. Nevertheless, we find that when stores are asked, a discount is granted approximately 40% of the time, with a median discount percentage of 10%. Discounts are more likely to be offered by small-scale firms, for higher-priced products, and for non-sale items. More generally, differences in price delegation behavior across firm types serve as an indicator that monitoring costs and employee skills are important drivers of bargaining behavior.

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Bibliographic Reference

Shelegia, S and Sherman, J. 2019. 'Bargaining at Retail Stores: Evidence from Vienna'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14078