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Economists have long studied markets in which large numbers of identical or very similar items are sold. If the markets are competitive, it is the forces of supply and demand that determine the market price. If there is a monopoly seller, the price is raised above the competitive price until marginal revenue and marginal cost are equal.
Setting a fixed price is no longer an efficient way of selling an item if it is significantly different from other items in the marketplace. Take, for example, a Rembrandt that has not been on the market for a long time. Different collectors will place different values on the desirability of adding it to their collections. If the seller knew these values, the optimal strategy would be to negotiate with the collector who valued it the most while threatening to sell it to the collector with the next highest valuation...
