An Aspect of Indivisible Land Development with a Reservation Level of Revenue

Recently, Batabyal and Yoo (2003) have studied aspects of indivisible and divisible land development in a dynamic and stochastic framework. In this note, we complement the analysis in this paper by examining an aspect of the indivisible land development decision when a landowner has an exogenously given reservation level of revenue. In particular, we show that the magnitude of the first record (largest offer) that exceeds the landowner's reservation revenue is independent of the time at which this record is received by the landowner