Some Factors Affecting Demand Withholding in Posted-Offer Markets

Posted: 12 Mar 2001

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.

Keywords: Strategic Buyer Behavior, Demand Withholding, Fairness, Reference Profit

JEL Classification: C90, D43, L13

Suggested Citation

Ruffle, Bradley J., Some Factors Affecting Demand Withholding in Posted-Offer Markets. Available at SSRN: https://ssrn.com/abstract=239390

Bradley J. Ruffle (Contact Author)

McMaster University ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

HOME PAGE: http://https://socialsciences.mcmaster.ca/people/ruffle-bradley

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
978
PlumX Metrics