Quality, price, and time-on-market

Jordan Martel

Economics Letters, 2018, vol. 171, issue C, 97-101

Abstract: Time-on-market is often interpreted as a negative signal of an asset’s quality. The lengthier the time-on-market, the greater the probability that past buyers arrived, observed some undesirable quality, and chose not to buy. In this paper, I propose a simple model of quality, price, and time-on-market. The model yields closed-form expressions for beliefs, prices, and rates of sale. To demonstrate the accessibility of the model, I work out simple comparative statics for time-on-market and sale price and extend the model by giving the seller a valuable outside option.

Keywords: Search; Learning; Time-on-market; Duration dependence (search for similar items in EconPapers)
JEL-codes: D83 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:171:y:2018:i:c:p:97-101

DOI: 10.1016/j.econlet.2018.07.025

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