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The Matching Problem (and Inventories) in Private Negotiation

Dale J. Menkhaus, Owen R. Phillips, Christopher T. Bastian and Lance B. Gittings
American Journal of Agricultural Economics
Vol. 89, No. 4 (Nov., 2007), pp. 1073-1084
Stable URL: http://www.jstor.org/stable/4492881
Page Count: 12
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The Matching Problem (and Inventories) in Private Negotiation
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Abstract

This study examines laboratory market outcomes under alternative matching risk scenarios and advance production. Limited access and/or asymmetry in the number of buyers and sellers cause a matching problem. When sellers hold inventory before sale and there is buyer concentration, prices are about 23% below the competitive level and close to the predicted monopsony price. The bargaining advantage shifts to buyers in this market environment. Sellers can benefit by creating alliances or cooperatives to increase their bargaining position for price and overcome poor access to buyers.

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