Inventories and Public Information in Private Negotiation: A Laboratory Market Study |
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| Authors: | Dale J. Menkhaus Owen R. Phillips Alla V. Yakunina |
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| Affiliation: | Dale J. Menkhaus is professor in the Department of Agricultural and Applied Economics and Owen R. Phillips is professor in the Department of Economics and Finance, both are at the University of Wyoming, and Alla V. Yakunina is professor in the Finance Department at Saratov State Socio-Economic University in Saratov, Russia. |
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| Abstract: | Using laboratory markets, this research investigates the impacts of reporting different kinds of aggregated trade information to buyers and sellers who conduct transactions through bilateral/private negotiation. There are a limited number of bargaining rounds or matches between buyer and seller pairs. Sellers hold a perishable inventory before negotiations begin. We find that knowledge of trades, along with price, improves the coordination and bargaining position of buyers. Trade prices are lower and buyer earnings are higher, relative to the no-information treatment or when just-past quantities or just-past prices are reported. Market efficiency declines as public information is reported. |
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| Keywords: | information laboratory markets private negotiation |
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