Bargaining at retail stores: Evidence from Vienna

November 29, 2021
retail and distribution

In this article published in the highly regarded academic journal Management Science (top 10 across all academic journals in Business, Economics, and Management in 2021 according to Google Scholar), Joshua Sherman and Sandro Shelegia discuss retail pricing behavior, discounts, bargaining, and competition.  

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 nonsale 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.