Bargaining at Retail Stores: Evidence from Vienna
22 Pages Posted: 6 Nov 2019 Last revised: 2 Nov 2020
Date Written: October 2019
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.
Keywords: Audit Study, Bargaining, posted price, Trading Mechanism
JEL Classification: C78, C93, D12, L81
Suggested Citation: Suggested Citation