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Bargaining and Fixed Price Offers: How Online Intermediaries are Changing New Car Transactions

Michael A. Arnold, Thierry Pénard
2007 Review of Network Economics  

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This paper develops a model of oligopolistic price competition to analyze the impact of online intermediaries such as Autobytel.com on the price setting process in the automobile market. The roles of dealer search costs, the fraction of buyers using the intermediary, the value of the item being sold, and heterogeneity in buyer bargaining abilities are explored. The model provides theoretical insights relevant to the empirical literature addressing the role that intermediaries like Autobytel
more » ... in online markets. For example, we present conditions under which the price offered through the intermediary is either higher or lower than offline (bargained) prices.
doi:10.2202/1446-9022.1114 fatcat:u2yicpwky5ht7lwndu6zv3hxdy
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Michael A. Arnold, Thierry Pénard. "Bargaining and Fixed Price Offers: How Online Intermediaries are Changing New Car Transactions." Review of Network Economics 6.2 (2007)