Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144980
Authors: 
Lester, Benjamin
Visschers, Ludo
Wolthoff, Ronald P.
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5945
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.
Subjects: 
asking prices
posted prices
auctions
competing mechanisms
competitive search
JEL: 
C78
D44
D82
D83
R31
Document Type: 
Working Paper

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