This paper considers a two-stage development problem for information goods with costless quality degradation. In our model, a seller of information goods faces customers that are heterogeneous with regard to both the marginal willingness to pay for quality and the outside opportunity. In the development stage, the seller determines the quality limit of the product. In the second stage, the sell...

In the framework of a first-price private-value auction, we study the seller as a player in a game with the buyers in which he has private information about their realized valuations. We find that depending upon his information, set of signals, and commitment power he may strategically transmit messages to buyers in order to increase his revenue. In an environment where the seller knows the ran...

The primary purpose of the current research has been to examine the roles of interpersonal, interorganizational, and institutional trust in establishing buyer-seller trust in public B2B e-marketplaces (EMP). Interpersonal trust refers to trust within the buyer-seller dyad. Interorganizational trust is trust between organizations, in this case mainly the buying and the selling company versus the...

The starting point for this study was the obvious " mis-match " between the dominating, consumer marketing-oriented way of approaching customer satisfaction on the one hand and our current understanding of industrial buyer–seller relationships and networks on the other. The purpose of this paper is to present a relational and contextual perspective on customer satisfaction and dissatisfaction i...

This paper investigates the extent of the holdup underinvestment problem in a buyer-seller relationship in which the seller has private information about his alternative trading opportunities. Theory predicts that, compared with a situation in which outside options are publicly observed, the seller obtains an informational rent while the buyer bears an informational loss. As a result the seller...

In this paper, we investigate the optimal selling scheme for a capacity-constrained seller who faces both aggregate demand and individual valuation uncertainties. As each consumer privately observes an initial estimate prior to the transactions and an updated information post-purchase, the problem exhibits the sequential screening feature and return policy emerges as part of the optimal selling...

When the quality of a good is at the discretion of the seller, how can buyers assure that the seller provides the mutually efficient level of quality? Contracts that provide a bonus to the seller if the quality is acceptable, or impose a penalty on the seller if quality is unacceptable, can in theory provide efficient incentives. But how are such contracts enforced? While the courts can be used...

This paper deals with a Niskanen type of public-procurement agency. It is shown that the procurement game should be separated into an investment game and a project game, the first game to be played before nature determines the actual realizations of benefit and costs of the project, the second game to be played afterward. In the first game the relationship-specific investments of agency and sel...

In this paper, we suggest using an English Auction Protocol for a procurement multi-attribute auction in which the item for sale is defined by several attributes, the buyer agent is the auctioneer, and the seller agents are the bidders. Such domains include auctions on task allocation, services, or compound products. At the beginning of the auction the buyer agent announces the required propert...

We examine the effect of relationship-specific investment on the use of detailed contracts using data on transactions from a survey of Romanian firms. In those transactions, seller relationship-specific investment increases the amount of contractual detail, while buyer relationship-specific investment decreases it. We interpret these results using a hostages model applied to cash-flow and credi...