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 ?
Subjects were provided with information about the dispute and a settlement negotiation aspiration, and then asked to set their own reservation price. Subjects receiving Version A (low aspiration) were provided the following information:
(37) The reservation price function of the primary insurer (line (b)) depends on the risk situation of the reinsurance company.
(3) This "minimum level of revenue" is sometimes also known as a landowner's "reservation price" (see Barnard and Butcher (1989)).
By closing the gap ([P.sub.B]-R[P.sub.B/A]) between the price of B and the reservation price of B when A has already been purchased, the likelihood that the customer will purchase B is increased.
In one auction, the researcher gets all subjects' reservation prices from these ten bids.
Equation 1 can also be used to determine a prospective buyer's reservation price: the price that would make the NPV equal to zero.
It is the utility enjoyed from the monetary sum that is the difference between the buyer's reservation price and the price at which the buyer transacts.
Then changes in the range of customer reservation price distribution are examined subsequently.
As shown in Head and Kumar (2005), when all firms have the same marginal cost [phi], they must all make the same profits; in particular, the same profits as any firm which charges the reservation price. This allows us to solve
We show that the optimal wholesale price, BA's optimal reservation price, and posted price all increase with the proportion of price takers under linear demand but decrease with it under constant elasticity demand.
In the auction tranche, the reservation price (minimum acceptable bid) is based on the formula price.
(7.) The assumption that the firm optimally segments consumers as well as that it knows the reservation price of each consumer is a simplifying assumption for the sake of exposition.