Optimal selling mechanisms with buyer price search

A-Tier
Journal: Journal of Economic Theory
Year: 2021
Volume: 196
Issue: C

Authors (2)

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We study optimal dynamic selling mechanisms in a two-stage model where the buyer can search for a better price at the second stage. When this outside price is public, the optimal selling mechanism takes the form of a fixed first-stage price with price matching in the second stage. In contrast, when the outside price is the buyer's private information, the optimal mechanism is a menu of two contracts: a first-stage sale at a higher price with immediate delivery, or a first-stage sale at a lower price with second-stage delivery. Thus the optimal form of search deterrence depends on the observability of the buyer's outside option.

Technical Details

RePEc Handle
repec:eee:jetheo:v:196:y:2021:i:c:s0022053121001241
Journal Field
Theory
Author Count
2
Added to Database
2026-01-25