Reservation price
As reservation price or reservation price is referred to in the microeconomics from the point of view of the consumer the maximum price he willing to pay for an additional unit of the good or service is (z. B. depending on income and preferences ) and from the perspective of the provider the minimum price it would accept (e.g. based on input prices and expectations) to offer another unit. In microeconomic models, a household usually asks for more than one unit of a good. The reservation price for the first unit usually differs from the reservation price for other units of the same good. Decreasing reservation prices then lead to a falling demand function. The highest reservation price of the customer is also called the prohibitive price. At the prohibitive price, the demand disappears (intercept of the demand function on the price axis).
In the diagram on the right, we find the reservation prices as values on the supply function (S) and demand function (D). The reservation prices of the provider and the customer are variable and intersect in the market equilibrium. In the market equilibrium (intersection of supply and demand functions), all exchange options are exhausted. If you want to sell p_GG at this price, you can sell, if you want to buy, you can buy.
If the reservation price of a household deviates from the market price, a benefit difference arises, which in welfare theory is called consumer surplus or producer surplus .
With perfect price differentiation , a provider is able to demand exactly the price from each customer that corresponds to his reservation price. The seller thus receives the full consumer surplus, which is not generally associated with welfare losses, but is referred to in economics as price discrimination and is associated with market failure .
Web links
- Reservation price - definition in the Gabler Wirtschaftslexikon