Topic
Dynamic pricing
About: Dynamic pricing is a research topic. Over the lifetime, 4144 publications have been published within this topic receiving 91390 citations. The topic is also known as: surge pricing & demand pricing.
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TL;DR: In this article, the authors consider a monopolist firm that plans its production, inventory, and pricing policy over a fixed and finite horizon, represented by an optimal control model which combines elements from three streams of literature.
67 citations
TL;DR: A highly flexible model of heterogeneity is implemented using multivariate mixtures of normals in a hierarchical choice model and it is demonstrated that the presence of loyalty materially affects optimal pricing.
Abstract: There is a substantial literature that documents the presence of state dependent utility with packaged goods data. Typically, a form of brand loyalty is detected whereby there is a higher probability of purchasing the same brand as has been purchased in the recent past. The economic significance of the measured loyalty remains an open question. We consider the category pricing problem in the presence of loyalty and demonstrate that a retailer has an incentive to invest in building brand loyalty to maximize the present value of category profits and that this materially affects optimal pricing. Given the well-known problems with the confounding of state dependence and consumer heterogeneity, loyalty must be measured in a model which allows for an unknown and possibly highly non-normal distribution of heterogeneity. We implement a highly flexible model of heterogeneity using multivariate mixtures of normals in a hierarchical choice model. We find important deviations from the standard one component normal mixture.
67 citations
TL;DR: In this article, the authors analyzed the pricing components and characteristics of representative real-time pricing (RTP) programs for industrial customers based on publicly available information and found that the savings by switching from flat rates to TOU and RTP are highly program dependent.
67 citations
18 Nov 2011
TL;DR: This paper considers electricity liberalization, where more than one electricity retailer can co-exist in each region, and the retailers compete or cooperate with each other to achieve the highest individual or combined revenue.
Abstract: Intermittent renewable energy sources and the use of smart meters introduce a significant challenge for the reliability of the smart grid. Real-time pricing is an important demand-side management mechanism for improving smart grid reliability through dynamically changing or shifting the electricity consumption of users. Presently, the dynamic real-time pricing research in the smart grid mainly focuses on the interactions between a single utility company/retailer and its users. In this paper, we consider electricity liberalization, where more than one electricity retailer can co-exist in each region, and the retailers compete or cooperate with each other to achieve the highest individual or combined revenue. Two types of electricity users are considered in this paper: traditional electricity users who pay a fixed price and opportunistic electricity users who may change the electricity demand or even turn to another electricity retailer. Two game formulations are described for the proposed real-time pricing scheme. One formulation is proposed for a totally competitive environment. Another game formulation is proposed for a cooperative environment. Some simulation results are presented to show the effectiveness of the proposed real-time pricing scheme.
67 citations
TL;DR: This paper studies the potential benefits of responsive pricing and demand learning to sellers of seasonal fashion goods and finds that demand uncertainty is high at the beginning of the year in such markets.
Abstract: This paper studies the potential benefits of responsive pricing and demand learning to sellers of seasonal fashion goods. As typical in such markets, demand uncertainty is high at the beginning of ...
66 citations