Sale of a Deteriorating Asset via Sequential Search

Steven A. Lippman, University of California - Los Angeles
John W. Mamer, University of California - Los Angeles

A BEJTE Contributions article.

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.

Submitted: June 29, 2008 · Accepted: April 11, 2009 · Published: June 26, 2009

Recommended Citation

Lippman, Steven A. and Mamer, John W. (2009) "Sale of a Deteriorating Asset via Sequential Search," The B.E. Journal of Theoretical Economics: Vol. 9 : Iss. 1 (Contributions), Article 21.
DOI: 10.2202/1935-1704.1494
Available at: http://www.bepress.com/bejte/vol9/iss1/art21

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