• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

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

Extracts from this document...

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.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Critically evaluate the perceived competitive starategies of the five clothing retail outlets, namely Edgars, ...

    However, imports of yarns under rebate of duty increased. It is expected that this trend will continue. During 1996, 45% of the total volume of yarns imported into the country were cleared under rebate of duty. Approximately 60% of all imported yarns were man-made filament yarns and 20% were yarns of man-made staple fibers.

  2. The Quest for Optimal Asset Allocation Strategies in Integrating Europe.

    a partial ordering of the choice alternatives, and therefore does not yield a ranking for all investment options; nor does it forward the 'best' or the 'worst' option. Markowitz (1952, 1959) showed that an investment in a portfolio of securities offers investors risk and return combinations that are not possible from individual securities.

  1. Assess whether a tuck shop is likely to be a successful business if it ...

    Results (In Appendix2) In order to estimate the profit I make I used the questions 1, 2 and I used a competitive pricing strategy and also kept a standard mark-up, while also undercutting the canteens prices. As a source for my set up costs I, at a Natwest bank created a Card plus Account with which I get a credit card.

  2. China or India? Many companies ask themselves this question. Due to saturated markets, increasing ...

    In 1991 it has begun to open up its economy for the private sector, reduced tariffs and taxes and FDI is welcome. Furthermore it decided to privatize its state owned enterprises. The results were obvious. GDP experienced a stable growth, FDI came into the country and the service sector, with the software development is booming.

  1. The Princes and the Pauper: An Analysis of transition economies in Eastern Europe.

    If people with similar likes and dislikes characterize countries, then there is a high probability of society reaching a consensus and a small chance of conflict amongst people. Thus, if a society is somewhat homogenous, there will most likely be a common unifying philosophy that will ensure solidarity and the spreading of social objectives.

  2. Retailing In India - A Government Policy Perspective

    Since information about this market is disaggregated, i.e., with individual brokers, even similar, adjacent plots often command different rentals. Jointly held properties and complex sub-letting arrangements further complicate ownership rights. Finally, high property taxes drive owners to demand a significant part of the payment in cash and without records.

  1. How to predict house prices.

    in turn ended up having arrears on the properties with eventual repossession. This shows that interest rates employment levels, government policies and worldwide economy all have to be taken into account when accessing house prices. The determination of price in the housing market is based on demand and supply, therefore

  2. Economics Coursework: The Price Mechanism - House prices.

    bank, building society or other financial institution for the purchase of a house. The loan is usually secured against the property; meaning that if the borrower fails to meet the loan payments the lender can repossess the property to recover their money.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work