You are right about competition serving quite a useful purpose in the real world. However the real world is not like financial markets where you have liquidity by the milli second with regard to competing offers. If competition did a great job of providing an alternative in real time, they would be no need to do the following in pretty much any negotiation
Pretend that you have lots of time and are in no hurry to close this deal with the other party or anyone else.
Pretend that you looked up and found/know of much better deals elsewhere that what the other party is offering. Alternatively claim that the competing deals you are getting are much better than they truly are.
Pretend that your “last price” is very different from your true last price.
If competition were doing an amazing job, there would be no reason to do 1-3 above.
You say above “you can just get a competing dealer to make an offer which becomes the upper bound”. If you are a person who is putting time to productive use, it would not be unreasonable to value your hour at well over $50. The question is therefore whether you can find competing offers without spending 10-20 hours which would pretty much erode your whole margin of savings.
You are right about competition serving quite a useful purpose in the real world. However the real world is not like financial markets where you have liquidity by the milli second with regard to competing offers. If competition did a great job of providing an alternative in real time, they would be no need to do the following in pretty much any negotiation
Pretend that you have lots of time and are in no hurry to close this deal with the other party or anyone else.
Pretend that you looked up and found/know of much better deals elsewhere that what the other party is offering. Alternatively claim that the competing deals you are getting are much better than they truly are.
Pretend that your “last price” is very different from your true last price.
If competition were doing an amazing job, there would be no reason to do 1-3 above.
You say above “you can just get a competing dealer to make an offer which becomes the upper bound”. If you are a person who is putting time to productive use, it would not be unreasonable to value your hour at well over $50. The question is therefore whether you can find competing offers without spending 10-20 hours which would pretty much erode your whole margin of savings.