Akın, Şerife NurayPlatt, B. C.2023-09-112023-09-1120221945-7669http://hdl.handle.net/10679/8786https://doi.org/10.1257/mic.20200227We study a dynamic equilibrium search model where sellers differ in their urgency to liquidate an asset. Buyers strategically make price offers without knowing a given seller’s urgency. We study liquidity and price dynamics on the transition path after an unexpected shock. Generically, the transition includes a phase where all buyers offer the same price, causing a market collapse; however, price dispersion resumes in finite time, leading to a recovery where both types make sales. We show that prices and liquidity can overshoot before converging to the steady state. When relaxed sellers randomly become desperate, dampening oscillations can occur.engrestrictedAccessarticle14415819900089212410000610.1257/mic.202002272-s2.0-85163874375