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Price Discrimination, Search, and Negotiation in an Oligopoly: A Field Experiment in Retail Electricity

David Byrne, Leslie Martin, Jia Sheen Nah

Published : 2019

Abstract

We use a field experiment to study price discrimination in a market with price posting and negotiation. Motivated by concerns that low-income consumers do poorly in markets with privately-negotiated prices, we built a call center staffed with actors armed with bargaining scripts to reveal the determinants of negotiated prices. By experimentally manipulating how information is revealed within a sequential bargaining game, we identify price discrimination based on ex-ante perceived search costs at the start of negotiations which can be overcome if consumers ex-post reveal they are informed about market prices. Combining posted and negotiated prices, we further document important asymmetries be..

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