Reservation price

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Reservation price

The price below or above which a seller or purchaser is unwilling to go.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
The value of fresh products with quality deterioration is approximated as an exponential function based on which the customer's reservation prices are calculated.
Business scholars and practitioners explore managing inventory from the perspectives of improvements in inventor management: past successes and future opportunities, inventory is people: how load affects service times in emergency response, inventory control under financial turbulence, optimizing retailer procurement and pass-through or trade discounts when retail discounts affect reservation prices and stockpiling, appropriate inventory policies when service affects future demands, practical inventory planning strategies for electronic commerce, and on teaching operations management at the master of business administration level in 21st-century business schools.
The standard model begins by assuming that users are indexed in ascending order according to their reservation prices using different real numbers in the interval (0, 1).
The theme park knows these reservation prices but does not know to which segment a particular consumer belongs.
We assume that even when the realized quantity from any supplier is less than the quantity reserved by the buyer, the supplier will not refund those reservation prices to the buyer.
While the demand functions in the body of the paper can simply be assumed, it is also possible to derive them from a uniform distribution of reservation prices. Suppose reservation prices, vi(t), at any time t in country i are distributed uniformly on the interval (([V.sub.i0]-[[gamma].sub.i0])[e.sup.rt],[V.sub.i0][e.sup.rt]).
It said overall selling prices had remained stable in the first half, but that private reservation prices had risen by 5% to an average PS179,199.
In their survey of the economics and marketing literatures on bundling, Stremersch and Tellis (2002) found that ambiguity exists concerning the concept of heterogeneity of reservation prices. They argued that the distribution of reservation prices consists of asymmetry and variation, and correlation alone is not sufficient to represent heterogeneity.
Taha added that reservation prices for hotels in Cairo, Aswan and Luxor were expected to drop by 20 per cent, while prices at hotels in Hurghada and Sharm Al-Sheikh were not expected to change from that of the previous year.
These win-win relationships result in a larger negotiation space, determined by the buyer's and seller's reservation prices (Walton and McKersie 1965; Raiffa 1982; White, Valley, Bazerman, Neale and Peck 1994) that is called the bargaining zone.
In doing so, we develop an unobserved-components (UCs)-inspired econometric technique to estimate a fixed-quantity (i.e., the quantity transacted is exogenously determined) bilateral bargaining model in the presence of unobserved reservation prices and potentially time-varying bargaining power.