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Quality, price, and time-on-market

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  • Martel, Jordan

Abstract

Time-on-market is often interpreted as a negative signal of an asset’s quality. The lengthier the time-on-market, the greater the probability that past buyers arrived, observed some undesirable quality, and chose not to buy. In this paper, I propose a simple model of quality, price, and time-on-market. The model yields closed-form expressions for beliefs, prices, and rates of sale. To demonstrate the accessibility of the model, I work out simple comparative statics for time-on-market and sale price and extend the model by giving the seller a valuable outside option.

Suggested Citation

  • Martel, Jordan, 2018. "Quality, price, and time-on-market," Economics Letters, Elsevier, vol. 171(C), pages 97-101.
    • Handle: RePEc:eee:ecolet:v:171:y:2018:i:c:p:97-101
    DOI: 10.1016/j.econlet.2018.07.025
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    References listed on IDEAS

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    1. Maarten C. W. Janssen & Santanu Roy, 2002. "Dynamic Trading in a Durable Good Market with Asymmetric Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 257-282, February.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Search; Learning; Time-on-market; Duration dependence;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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    Access and download statistics

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