Reservation price


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Reservation price

The price below or above which a seller or purchaser is unwilling to go.

Reservation Price

The price for an asset above which a buyer is not willing to pay and/or below which a seller is not will to take. This tension between the buyer wanting a low price and the seller wanting a high price helps create the market price for the asset. The reservation price is important in microeconomics, where it is used to help determine an asset's equilibrium price. See also: Reservation wage.
References in periodicals archive ?
The auction data, including the number of shares sold in the auction tranche, the subscription level in the auction tranche, the reservation price, the maximum bidding price, the minimum bidding price, and the quantity-weighted winning price, were collected from the Taiwan Securities Association.
Manchanda, 2003, "Measuring Heterogeneous Reservation Prices for Product Bundles," Marketing Science, 22, 107.
Though internal to the seller, the reservation price is strongly influenced by aspects beyond the negotiator's control, such as the company's cost base.
The reservation price of the processors will obviously be a function of the price they receive for their processed product.
where the first customer consumes (A - t) units, and the last customer, who has a reservation price of exactly (A - t), consumes 0 units.
The individual reservation price reflects what investors think the stock price should be worth.
Should she lock-up the producer surplus she will enjoy by accepting Boris's offer of $285,000, or should she press on with a counterproposal that may yield more producer surplus, but that may also be above Boris's reservation price and may convince him that further negotiations are a waste of time?
Dodge Viper), the buyer's reservation price should be the MSRP (Manufacturer's Suggested Retail Price).
Since higher-default-risk borrowers are required to pay risk premiums one way or another, one would expect that the reservation prices (or bids) for FHA and VA borrowers would likely be lower than would otherwise be the case.
In Indianapolis, for example, with an infinite horizon, the median home in the full sample of 103 matched pairs sold for 65 percent below its reservation price, whereas the median home among the twenty-three homes that were both sold and rented had a market price 75 percent below its reservation price.
2) It will become more common because advances in technology will permit firms to more accurately estimate a buyer's reservation price.
Kanbur and Keen (1993) use a reservation price for the demand of a good and find that the relative size of the bordering economy is an important determinant of the optimal tax strategy.