Timothy N. Cason,
Daniel Friedman, and Garrett H. Milam
"Bargaining versus posted price competition in customer markets"
Abstract: We compare posted price and bilateral bargaining (or "haggle") market institutions in 12 pairs of laboratory market sessions. Each session runs for 50-75 periods in a customer market environment, where buyers incur a cost to switch sellers. Costs evolve following a randm walk process. Coasian and New Institutionalist traditions provide competing conjectures on relative market performance. We find that efficiency is lower, sellers' price higher, and prices are stickier under haggle than under posted offer.