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 ?
No user will purchase the good if the market price is greater than the highest reservation price [p > r(0)] and all potential users will purchase the good if the price is less than, or equal to, the lowest reservation price [p [less than or equal to] r(1)].
w: reservation price per unit of logistics service capacity,
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.
The customer with the highest RP purchases A - t units, while the last customer, whose reservation price is A - t + 1, purchases one unit of the product.
Also, the seller does not know any given buyer's reservation price, but knows the distribution of reservation prices over potential buyers.
In this context the individual reservation price is understood as an agent's subjective assessment of the stock's intrinsic value that prompts immediate agent's response (to buy or sell the security).
Suppose for the moment all firms expect consumers to use effective reservation price R > 0.
Through the practice of reservation price deception (i.
For example, if you know the client is highly price sensitive, you may only present the reservation price for all three options.