Showing papers on "Dynamic pricing published in 1986"
TL;DR: In this article, the authors analyzed the dynamic pricing strategies of three types of monopolists: nonmyopic, myopic and surprised, and showed that it is optimal for a non-myopic firm to price its product at a higher level than a myopic firm.
Abstract: This paper analyzes dynamic pricing strategies for new durable goods in a two-period context. The first period is characterized as a monopoly market structure for a new product having dynamic demand. The second period begins when a new firm enters the market, and thereby changes the market structure to a duopolistic one. We begin by analyzing the pricing strategies of three types of monopolists: nonmyopic, myopic and “surprised.” A nonmyopic monopolist is a first entrant who perfectly predicts the competitive entry. A myopic monopolist totally discounts the duopolistic period, and a “surprised” monopolist is a first entrant who has the longer time horizon of the nonmyopic monopolist, but who does not foresee the competitive entry. Our results indicate that the nature of these pricing strategies may be quite different. It is optimal for the nonmyopic firm to price its product at a higher level than the myopic monopolist. Additional results indicate under what circumstances the “surprised” monopolist will p...
176 citations
01 Jan 1986
TL;DR: In this paper, the authors present a tutorial on dynamic and differential games and apply them to macroeconomics, including game theory models of fisheries management and optimal dynamic pricing in an Oligopolistic Market.
Abstract: 1. A Tutorial on Dynamic and Differential Games.- 2. On Expectations, Information and Dynamic Game Equilibria.- 3. On Affine Incentives for Dynamic Decision Problems.- 4. On the Computation of Equilibria in Discounted Stochastic Dynamic Games.- 5. Some Economic Applications of Dynamic Stackelberg Games.- 6. Applications of Dynamic Game Theory to Macroeconomics.- 7. Optimal Strategic Monetary Policies in Dynamic Interdependent Economies.- 8. Optimal Dynamic Pricing in an Oligopolistic Market: A Survey.- 9. Dynamic Advertising and Pricing in an Oligopoly: A Nash Equilibrium Approach.- 10. Game Theory Models of Fisheries Management - A Survey.- 11. Common-Property Exploitations under Risks of Resource Extinctions.
48 citations
TL;DR: In this article, the implications of experience curves and brand loyalty for optimal dynamic pricing policy were studied in a continuous time model and it was shown that prices should decrease over time for high discount rates and steeper exogenous declines in variable costs.
Abstract: This article studies the implications of experience curves and brand loyalty for optimal dynamic pricing policy. In a continuous time model, we synthesize several results from the literature on open loop equilibria. Specifically, we show that prices should decrease over time for high discount rates and steeper exogenous declines in variable costs. Conversely, the prices should increase over time if experience curves affect fixed costs and if consumers are brand loyal.
40 citations
01 Jan 1986
TL;DR: In this paper, the authors deal with some important issues in relation to the determination of optimal pricing policies in an oligopolistic market, which has been approached by using different bodies of research, eg economic theory, marketing science and game theory.
Abstract: The article deals with some important issues in relation to the determination of optimal pricing policies in an oligopolistic market This problem has been approached by using different bodies of research, eg economic theory, marketing science and game theory However, many models are still inadequate in their treatment of the dynamics of pricing as well as the problems of competitive interactions
25 citations
TL;DR: In this article, the optimal dynamic pricing policy of a monopolist faced with demand that follows a first-order adjustment process is examined, and it is shown that when profits are discounted, initial prices are lower than in the undiscounted case, thus increasing the rate of product diffusion initially.
Abstract: This paper examines the optimal dynamic pricing policy of a monopolist faced with demand that follows a first-order adjustment process. This adjustment process is assumed to capture the diffusion of a new durable good. Under these conditions the optimal policy has the structure of skimming, i.e. high initial prices followed by monotonically declining prices. This corresponds to the usual notion of a price discriminating monopolist who travels down the demand curve in order to garner all consumer surplus, but with one difference. Specifically, it is seen that when cash flows are not discounted the policy is to travel down a line that is parallel to the demand curve if demand is linear in price. If demand is of the constant elasticity type, the policy is to travel down a curve that is steeper than the demand curve. Finally, when profits are discounted, initial prices are lower than in the undiscounted case, thus increasing the rate of product diffusion initially.
1 citations