Some factors affecting demand withholding in posted-offer markets

Bradley J. Ruffle

Research output: Contribution to journalArticlepeer-review

27 Scopus citations

Abstract

Both oligopoly theory and experiments are concerned almost uniquely with sellers' behavior. Buyers' ability to exhibit non-trivial behavior in different market institutions remains unaddressed. This paper investigates the impact of three variables (number of buyers, surplus division at the market-clearing price and information revelation) on strategic and fairness-motivated demand withholding. Demand withholding and its ability to force lower prices increase as the number of buyers or the share of surplus earned by the buyers decreases. However, increasing the information revealed to subjects about the surplus inequality favoring sellers mildly facilitates collusion among sellers rather than provoking demand withholding as conjectured.

Original languageEnglish
Pages (from-to)529-544
Number of pages16
JournalEconomic Theory
Volume16
Issue number3
StatePublished - 1 Dec 2000

Keywords

  • Demand withholding
  • Fairness
  • Reference profit
  • Strategic buyer behavior

Fingerprint

Dive into the research topics of 'Some factors affecting demand withholding in posted-offer markets'. Together they form a unique fingerprint.

Cite this