Sellers price higher when they have more attached buyers, when buyers have less information on rivals' prices, when rivals post higher prices, and when less time remains. Posted offer markets with costly buyer search are investigated in 18 laboratory sessions. Each period sellers simultaneously post prices. The sessions vary q, the search cost, the number of sellers, and the number and kind of buyers. Each market runs 50-75 periods in a customer market environment, where buyers incur a cost to switch sellers.
Costs evolve following a random walk process.
Coasian and New Institutionalist traditions provide competing conjectures on relative market performance. We find that efficiency is lower, sellers price higher, and prices are stickier under haggle than under posted offer. Posted offer markets with costly buyer search are investigated in 18 laboratory sessions. Each period sellers simultaneously post prices. Then each buyer costlessly observes one or two of the posted prices and either accepts an observed price, drops out, or pays a cost to search again that period.