List Price and Negotiated Transactions in Local Wholesale Markets in Korea

Focusing on the Case of Cheon-An Wholesale Market

Abstract

Wholesale markets now play a pivotal role in distribution channels from places of production to consumer markets through a range of diverse functions. Owing to various distribution paradigms surrounding wholesale markets, however, polarization between the central wholesale market and the local wholesale markets has become more severe even within the wholesale markets, while the competitive edge of the wholesale markets has gradually deteriorated and the market dominance of wholesale markets has steadily declined. It is with this background in mind that this study pays attention to pre-determined price-negotiated transactions as a measure to enhance efficiency of transactions in order to solve diverse problems surrounding the wholesale markets and to deal with the polarization between the central wholesale market and the local wholesale markets. Pre-determined price-negotiated transaction induces stable trade between places of production and consumers by compensating for the shortcomings of the auction system, thereby alleviating price volatility and contributing to the promotion of the interests for consumers and producers alike.