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Directed search, coordination failure, and seller profits: an experimental comparison of posted pricing with single and multiple prices
journal contributionposted on 2013-08-01, 00:00 authored by Nejat AnbarciNejat Anbarci, N Feltovich
We experimentally examine posted pricing and directed search. In one treatment, capacity-constrained sellers post fixed prices, which buyers observe before choosing whom to visit. In the other, firms post both “single-buyer” (applied when one buyer visits) and “multibuyer” (when multiple buyers visit) prices. We find, based on a 2 × 2 (two buyers and two sellers) market and a follow-up experiment with 3 and 2 × 3 markets, that multibuyer prices can be lower than single-buyer prices or prices in the one-price treatment. Also, allowing the multibuyer price does not affect seller profits and increases market frictions.