Sale of a Deteriorating Asset via Sequential Search

Lippman Steven A. and Mamer John W
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Lippman Steven A.: University of California - Los Angeles, slippman@anderson.ucla.edu
Mamer John W: University of California - Los Angeles, jmamer@anderson.ucla.edu

The B.E. Journal of Theoretical Economics, 2009, vol. 9, issue 1, 30

Abstract: We consider the sale of an asset via sequential search over a finite time horizon and analyze the problem in both the posted price and the reservation price regimes. The distinguishing feature of this search model is the fact that the asset deteriorates with the passage of time. Under mild conditions, we show that the seller's optimal posted price (and the seller's optimal reservation price) per remaining unit of the asset decreases as time passes.

Keywords: non-stationary search; deteriorating assets; posted prices; reservation prices; fixed costs; marginal product of labor (search for similar items in EconPapers)
Date: 2009
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DOI: 10.2202/1935-1704.1494

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