Bargaining or haggling is a type of negotiation in which the buyer and seller of a good or service debate the price and exact nature of a transaction. If the bargaining produces agreement on terms, the transaction takes place. Bargaining is an alternative pricing strategy to fixed prices. Optimally, if it costs retailers nothing to engage in and allow bargaining, they can deduce buyers' willingness to spend. Bargaining allows for capturing more consumer surplus as it allows price discrimination, a process whereby a seller can charge a higher price to a more eager buyer. Haggling has largely disappeared in parts of the world where the cost to haggle exceeds the gain to retailers for most common retail items. However, for expensive goods such as automobiles sold to uninformed buyers, bargaining can remain commonplace.
