Competing with asking prices

Benjamin Lester, Ludo Visschers and Ronald Wolthoff

Theoretical Economics, 2017, vol. 12, issue 2

Abstract: 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.

Keywords: Asking prices; posted prices; auctions; competing mechanisms; competitive search (search for similar items in EconPapers)
JEL-codes: C78 D44 D82 D83 R31 (search for similar items in EconPapers)
Date: 2017-05-30
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Related works:
Working Paper: Competing with Asking Prices (2016)
Working Paper: Competing with Asking Prices (2015)
Working Paper: Competing with Asking Prices (2015)
Working Paper: Competing with Asking Prices (2014)
Working Paper: Competing with Asking Prices (2014)
Working Paper: Competing with Asking Prices (2014)
Working Paper: Competing with asking prices (2013)
Working Paper: Competing with Asking Prices (2013)
Working Paper: Competing with Asking Prices (2013)
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