Competing with Asking Prices

Arbeitspapier

In many markets, sellers advertise their good with an asking price. This is a price at which the seller will take his good off the market and trade immediately, though it is understood that a buyer can submit an offer below the asking price and that this offer may be accepted if the seller receives no better offers. We construct an environment with a few simple, realistic ingredients and demonstrate that, by using an asking price, sellers both maximize their revenue and implement the efficient outcome in equilibrium. We provide a complete characterization of this equilibrium and use it to explore the implications of this pricing mechanism for transaction prices and allocations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 5945

Classification and Topics

• Classification: Wirtschaft ; Bargaining Theory; Matching Theory ; Auctions ; Asymmetric and Private Information; Mechanism Design ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Housing Supply and Markets
• Subject: asking prices ; posted prices ; auctions ; competing mechanisms ; competitive search

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lester, Benjamin ; Visschers, Ludo ; Wolthoff, Ronald P.
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/144980
• Last update: 10.03.2025, 11:43 AM CET