Some factors affecting demand withholding in posted-offer markets

Abstract

Both oligopoly theory and experiments are concerned almost uniquely with sellers’ behavior. Buyers’ ability to exhibit non-trivial behavior in different market institutions remains unaddressed. This paper investigates the impact of three variables (number of buyers, surplus division at the market-clearing price and information revelation) on strategie and fairness-motivated demand withholding. Demand withholding and its ability to force lower prices increase as the number of buyers or theshare of surplus earned by the buyers decreases. However, increasing the information revealed to subjects about the surplus inequality favoring seHers mildly facilitates coHusion among sellers rather than provoking demand withholding as conjectured.