Bargaining

Around 10 years ago, while I was visiting family friends in Canada I heard this story of a Canadian official. In response to complaints that welfare recipients were not getting enough money to eat the official said that people should go to the grocery store and bargain for lower prices. This seemed rather silly to me as teenager, you can’t bargain with a grocery store. It also seemed silly to my father’s Canadian Economist friend who told the story, so it isn’t some difference between the US and Canada.

The New York Times had an article about bargaining for Electronics with megastores like Best Buy, Circuit City:

It appears that you can bargain at these types of places.
So why is bargaining out of fashion at a North American grocery store, but acceptable on a car lot or perhaps an electronic store?

If I hazard a guess it would be that bargaining makes more sense on big ticket items. Imagine how long it would take if I bargained on everything in my grocery cart. This is because there are fixed cost to bargaining. Second a company needs to empower employees to make deals. This works well for cars, since negotiations can be made at the reduction of the salesperson’s commission.