Strategic Waiting in B2B Marketplaces: Price Premiums from Delayed First Bids

Abstract

In business-to-business (B2B) marketplaces, the concept of strategic waiting is considered in this article where the suppliers begin to delay their first-round bids and obtain price premiums due to information asymmetry. It is a study that determines whether a delay in bidding contributes to price premiums by conducting an experiment in a lab that is made to resemble a B2B market. The subjects (who were the representatives of different supplier companies, N=150) could make immediate bids or withhold the bids. These simulated bidding programmes and data analytics were used to determine the cost. The findings were the suppliers waiting to bid received a better price premium (12 percent on average, p < 0.05) particularly in markets that were less competitive and more obscure. This means that among the pricing strategies, strategic waiting is a good strategy to use in the B2B markets. The results indicate that the suppliers are advised to wait depending on the market conditions so as to get better prices and compete. More studies will be required to look into the wider effects of bidding delay on the competition in the market.