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Haggling over prices is common in many Middle Eastern countries, and elsewhere in the world. Can you explain why shopkeepers should prefer to haggle rather than ask a set price for their goods? And why are Turkish shopkeepers and Turkish street traders mo

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Introduction

Haggling over prices is common in many Middle Eastern countries, and elsewhere in the world. Can you explain why shopkeepers should prefer to haggle rather than ask a set price for their goods? And why are Turkish shopkeepers and Turkish street traders more proactive in their selling approach than shopkeepers in Europe and the USA? Haggling over prices is a very frequent procedure in many African, Eastern European, Caribbean and Asian economies. It is also experienced in flea markets and farmers markets in developed countries but this bargaining feature is of a lesser extent. In Turkey, bargaining is extended to include many less valuable items, especially unique handmade goods such as carpets, crafts, artwork and antiques, items which do not have standardized markets. You can bargain for any item you want to purchase in Turkey. Many people find bargaining tiresome and unpleasant. Pazarlik (bargaining) is a social as well as a business practice in Turkey. Riley and Zeckhauser (1983) argue that haggling, as opposed to fixed posted prices, is sub-optimal for a seller. This is because haggling makes it difficult for a seller to post a high price if buyers know that they can always haggle and buy the good at a lower price. Shopkeepers also don't post prices because posted prices may be used to prevent collusion between buyers and sales agents. Bester (1994) ...read more.

Middle

established super markets in developing countries for example in Turkey; market/bazaar shopkeepers and small retail businesses allow for price bargaining and opportunity for quantity bonus, but supermarkets do not. Indeed, in some cases when a buyer asks a seller for a price, the seller will not quote a price but will instead ask the buyer to quote a price. This is because the shopkeeper/seller knows that any price he/she quotes in response to the buyer's question "what is your price" will be followed by a lower quoted price by the buyer resulting in bargaining. Indeed, the seller expects buyer to bargain and will be surprised if he didn't as in the case of shopkeepers in Turkey's Grand Bazaar and other tourist markets. When shopkeepers cannot post prices (as in the case of Turkey), they might try to compete by offering non-price bargaining deals. Once Sellers and/or buyers accept price bargaining as the process by which price is determined in these markets, then there is room for quantity bonus. Quantity bonus occurs when the buyer expects extra quantity to be given, according to the goods bought. From some shopkeeper's perspectives, no-haggle pricing means they would not be able to offer their 'dedicated' customers a better price, in appreciation for, say, their loyalty. ...read more.

Conclusion

The negotiation process (haggling process) does not go on for a long time because they tire up with bargaining process between them and the buyers. For Example, in the environs of Saint Sophia and the Blue Mosque, shopkeepers or their assistants approach you to try and sell you authentic Turkish carpets or porcelain or whatever it is they are selling. These folks are nothing if not persistent, but they are friendly and proud of their wares just the same. Conclusion In the essay, there was another explanation for why price haggling is allowed in some markets but not in others. The explanation was that, where there are agency problems, post-prices are more likely. Price haggling is more likely if there are no agency problems. Posted prices are more likely to be public information while bargained prices tend to be private information. Since posted prices are public information, sellers can easily undercut each other's price because each seller's price is easily observable. Resources: Riley, J.G., and Zechauser, R. (1983). Optimal selling strategies: when to haggle, when to hold firm. Quarterly Journal of Economics 98: 267-89. Bester, H. (1994). Price commitment in search markets. Journal of Economic Behavior and Organization 25: 109-120. Arnold, M.A., and Lippman, S.A. (1998). Posted prices versus bargaining in markets with asymmetric information. Economic Inquiry 36: 450-457. Doyle, P. and Hart, N.A (1982) Case Studies In International Marketing Chapter 8: International Marketing 8: 25-29 ...read more.

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