A Monopolistic And Oligopolistic Stochastic Flow Revenue Management Model
- Topics:
- Revenue Forecasting
- Tags:
- Marketing,
- Marketing Research,
- Pricing,
- Pricing Policy,
- Pricing Strategy,
- Revenue,
- Revenue Management
- Source:
- INFORMS
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Overview: This paper studies a one-shot inventory replenishment problem with dynamic pricing. The customer arrival rate is assumed to follow a geometric Brownian motion. Homogeneous customers have an isoelastic demand function and do not behave strategically. A closed-form optimal pricing policy is found, which utilizes current demand information. Under this pricing policy the inventory trajectory is deterministic, and a retailer sells all inventory. It is shown that dynamic pricing coordinated with the inventory decision achieves significantly higher profits than does static pricing. Furthermore, under oligopolistic competition the authors have established a weak perfect Bayesian equilibrium for the price and inventory replenishment game. Finally, the trade-off between dynamic pricing and price precommitment is examined and found that flexible pricing is still beneficial, provided competition is not too intense.
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Format: PDF | Size: 179KB | Date: Nov 2006 | Pages: 12
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