Among the means of implementing dynamic pricing strategies in e-commerce, online bargaining is found to be better than revenue management and online auction, because each deal actually reaches a “win-win” situation for both the buyer and the seller in the sense that the mutually agreed deal price is higher than the seller’s reserved price but lower than the buyer’s reserved price. Such feature ...

Impose Assumption 1 and assume there exists a β ∈ B with βΓ(v) > v. The semi-separating equilibrium is characterized by a discount factor for the marginal buyer, β̂ ∈ B, which is determined in equation (A1) below. For now, fix β̂ and assume, as we verify below, that β̂Γ(v) > v. We next define two critical prices. The lowest price with trade is p ≡ β̂Γ(v), the value that the marginal buyer places on...

In e-marketplaces with limited inventory where buyers’ demand is larger than sellers’ supply, promoting honesty raises new challenges: sellers may behave dishonestly because they can sell out all products without the necessity of gaining high reputation; buyers may provide untruthful ratings to mislead other buyers in order to have a higher chance to obtain the limited products. In this paper, ...

According to transaction cost economics, contracts are always incomplete and offer opportunities to defect. Some level of trust is a sine qua non for trade. If the seller is better informed about product quality than the buyer, the buyer has to rely on information the seller provides or has to check the information by testing the product or tracing the supply chain processes, thus incurring ext...

A buyer-seller watermarking protocol deters dishonest buyers from illegally distributing bought content. This is achieved by giving the seller the capability to trace and identify these buyers, while also allowing the seller to prove illegal acts to a third party. At the same time, an honest buyer is prevented from being falsely accused of illegal content distribution by the seller. Many protoc...

A “conservation good” (such as a tropical forest) is owned by a seller who is tempted to consume (or cut), but a buyer benefits more from conservation. The seller does conserve if the buyer is expected to buy, but the buyer is unwilling to pay as long as the seller conserves. This contradiction implies that the market for conservation cannot be efficient and conservation is likely to fail. A le...

We consider homogeneous two-sided markets, in which connected buyer-seller pairs bargain and trade repeatedly. In this infinite market game with exogenous matching probabilities and a common discount factor, we prove the existence of equilibria in stationary strategies. The equilibrium payoffs are given implicitly as a solution to a system of linear equations. Then, we endogenize the matching m...