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Sale of a Deteriorating Asset via Sequential Search

Author

Listed:
  • Lippman Steven A.

    (University of California - Los Angeles, slippman@anderson.ucla.edu)

  • Mamer John W

    (University of California - Los Angeles, jmamer@anderson.ucla.edu)

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.

Suggested Citation

  • Lippman Steven A. & Mamer John W, 2009. "Sale of a Deteriorating Asset via Sequential Search," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-30, June.
    • Handle: RePEc:bpj:bejtec:v:9:y:2009:i:1:n:21
    DOI: 10.2202/1935-1704.1494
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    References listed on IDEAS

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