Searching a bargain: "play it cool" or haggle

Abstract

This paper investigates the impacts of reputation (in contact with in exibility) on imperfectly competitive search markets where the sellers announce heir initial demands prior to the buyer's visit and the buyer directs is search for a better deal. The buyer facing multiple sellers can egotiate with only one at a time and can switch his bargaining partner with ome cost. The introduction of commitment types that are in exible in their emands, even with low probabilities, makes the equilibrium of the resulting ultilateral bargaining game essentially unique. A modied war of attrition structure is derived in the quilibrium. The model unites and smooths out Bertrand and Diamond price ompetition models and eliminates their inexplicable predictions.