Price Skimming: Commitment and Delay
in Bargaining with Outside Option

This paper studies a bargaining problem in which the buyer’s valuation and outside option are private information. We show that there exists a non-stationary equilibrium in which the seller can secure the full commitment profit (from the optimal sales mechanism that exhibits price skimming), if and only if the buyer’s outside option is non-negligibly zero. Our innovation is to show that (i) both the Coasean reversion and positive selection are necessary for the seller to secure the full commitment profit and (ii) the Coasean equilibria may coexist with positive selection despite their claimed incompatibility if the non-negligibly zero outside option exists.