Price negotiation under uncertainty

Yongma Moon, Tao Yao, Sungsoon Park

Research output: Contribution to journalArticlepeer-review

15 Scopus citations

Abstract

This paper examines supply contract negotiation when buyer's revenue and seller's cost are uncertain. In these circumstances, both the seller and the buyer have an option to determine when to sell and buy, which may influence negotiation outcomes. Thus, we developed a bilateral negotiation model to derive the optimal selling (buying) rule considering the option. Our results show that the options of waiting to sell and to buy (1) narrow the traditional zone of possible agreement and (2) lower the probability of negotiation agreement. It is also shown that impasses can occur due to uncertainty, even when a purchase price is lower than the buyer's future revenue and higher than the seller's future cost.

Original languageEnglish (US)
Pages (from-to)413-423
Number of pages11
JournalInternational Journal of Production Economics
Volume134
Issue number2
DOIs
StatePublished - Jan 1 2011

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

Fingerprint Dive into the research topics of 'Price negotiation under uncertainty'. Together they form a unique fingerprint.

Cite this