Journal of Applied Economic Research
ISSN 2712-7435
Negotiation Transaction Costs Estimation Of An Industrial Enterprise
Antonenko E.V.
Abstract
The article describes the negotiation process between a supplier and an industrial enterprise. The mathematical model of this process is developed. We consider a bargaining game between two players with conflicting interests. Two phases of negotiations are identified. In the first phase, the players make significant changes in their offers. This happens before the zone of agreement is reached. After that, the second phase begins. In the second phase, the players change their offers much more cautiously. The number of rounds that the negotiations may take before they are completed is determined on the basis of the tit-for-tat strategy. In this strategy, one party adjusts its its behavior to the behavior of the other party. In accordance with the expected number of rounds of negotiations, the player's offers are formed in the model. To get realistic results, each player is assigned a coefficient of force that determines the effectiveness of the negotiation process. We present a technique for calculating the coefficients for the buyer’s and the seller’s force. An industrial enterprise’s bargaining and negotiation transaction costs classification is introduced as well as formulas for their calculation. We develop software that allows you to carry out simulation of the bargaining process and determine the expected number of rounds of negotiations, the final price of the contract, the size of transaction costs of an industrial enterprise in each round, and allows you to find the optimal total contract price with respect to transaction costs. We use the model experiment to show the work of the software. Transaction costs estimation and optimization of the total contract price is done. The results of this research can be used by industrial enterprises for assessing the total value of contracts with respect to transaction costs. The most effective use of this software is possible as part of a dynamic model of relations between an industrial enterprise and a group of suppliers. This model takes into account the time spent on negotiations, reputation and quality of fulfilling the contractual obligations
Keywords
Key words: modelling negotiations; buyer’s force; seller’s force, negotiation transaction cost estimation; total contract value optimization.
About Authors
DOI: http://dx.doi.org/10.15826/vestnik.2016.15.1.04
Download full text article:
~869 KB, *.pdf
(Uploaded
05.04.2016)
Created / Updated: 2 September 2015 / 20 September 2021
© Federal State Autonomous Educational Institution of Higher Education «Ural Federal University named after the first President of Russia B.N.Yeltsin»
Remarks?
select the text and press:
Ctrl + Enter
Portal design: Artsofte
Contact us
Rector's Office
Rector, Dr. Victor Koksharov
Tel. +7 (343) 375-45-03, e-mail: rector@urfu.ru
Vice-Rector for International Relations, Dr. Maxim Khomyakov
Tel. +7 (343) 375-46-27, e-mail: Maksim.Khomyakov@urfu.ru