“2009 Mercedes C300 Sport 4MATIC — $19,000 or Best Offer” –Craigslist

Many goods are offered for sale with an asking price. When a seller posts an asking price, it’s typically implied that this is the price he is willing to accept in exchange for his good but that he would also entertain offers below the asking price. For example, when potential buyers read the advertisement above, they understand that they can either offer $19,000 and be sure of getting the car, as long as it hasn’t sold yet, or they can offer less than $19,000, in which case they may not get the car, depending on how much the seller values it and whether any other buyers offer more.

This method of selling a good or service appears in a variety of markets and goes by many names. For example, it’s often called the listing price in the housing market or the sticker price in the market for new cars. Companies are typically listed for sale with an offer price. In the classified section, sellers will often announce a price followed by the phrase “or best offer,” while Internet auction sites like eBay allow sellers the option of posting a “buy-it-now” price. While each of these markets may work slightly differently, they all share the feature that sellers post some price, and buyers can either pay that price or try to buy it for less.

This article appeared in the Fourth Quarter 2015 edition of Business Review. Download and read the full issue.