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Limit price
About: Limit price is a research topic. Over the lifetime, 4865 publications have been published within this topic receiving 148546 citations.
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TL;DR: In this paper, the authors proposed a model that lets consumers react negatively only when they become convinced that prices are unfair, which can explain price rigidity, though its implications are not identical to those of existing models of costly price adjustment.
234 citations
TL;DR: The pricing and/or lot sizing problem faced by a reseller is modeled assuming a general deterioration rate and a general demand function and the model allows for backlogging of demand.
234 citations
01 Jul 2013
TL;DR: A revenue management framework from economics is adopted, and the revenue maximization problem with dynamic pricing as a stochastic dynamic program is formulated, and its optimality conditions are characterized, and important structural results are proved.
Abstract: In cloud computing, a provider leases its computing resources in the form of virtual machines to users, and a price is charged for the period they are used. Though static pricing is the dominant pricing strategy in today's market, intuitively price ought to be dynamically updated to improve revenue. The fundamental challenge is to design an optimal dynamic pricing policy, with the presence of stochastic demand and perishable resources, so that the expected long-term revenue is maximized. In this paper, we make three contributions in addressing this question. First, we conduct an empirical study of the spot price history of Amazon, and find that surprisingly, the spot price is unlikely to be set according to market demand. This has important implications on understanding the current market, and motivates us to develop and analyze market-driven dynamic pricing mechanisms. Second, we adopt a revenue management framework from economics, and formulate the revenue maximization problem with dynamic pricing as a stochastic dynamic program. We characterize its optimality conditions, and prove important structural results. Finally, we extend to consider a nonhomogeneous demand model.
232 citations
TL;DR: In this article, the authors analyzed the characteristics of previous studies in marketing and generated a set of three empirical generalizations, namely, an increase in price advertising leads to higher price sensitivity among consumers, the use of price advertising leading to lower prices, and a increase in non-price advertising lead to lower price sensitivity.
Abstract: Consumers' sensitivities to price changes are an important input to strategic and tactical decisions. It has been argued that price sensitivities depend on factors such as advertising. Prior studies on the effect of advertising on consumer price sensitivity have found seemingly conflicting results. We analyze the characteristics of previous studies in marketing and generate a set of three empirical generalizations. These are (1) an increase in price advertising leads to higher price sensitivity among consumers, (2) the use of price advertising leads to lower prices, and (3) an increase in nonprice advertising leads to lower price sensitivity among consumers. These generalizations have important implications for managers and researchers. Managers need to coordinate their advertising and pricing decisions to attain maximum profits. For researchers, our summary and discussion of empirical results provide directions for future.
232 citations
TL;DR: In this article, the authors present a series of three field-studies in which price endings were experimentally manipulated and the data yield two conclusions: first, use of a $9 price ending increased demand in all three experiments and second, the increase in demand was stronger for new items than for items that the retailer had sold in previous years.
Abstract: Although the use of $9 price endings is widespread amongst US retailers there is little evidence of their effectiveness. In this paper, we present a series of three field-studies in which price endings were experimentally manipulated. The data yield two conclusions. First, use of a $9 price ending increased demand in all three experiments. Second, the increase in demand was stronger for new items than for items that the retailer had sold in previous years. There is also some evidence that $9 price endings are less effective when retailers use “Sale” cues. Together, these results suggest that $9-endings may be more effective when customers have limited information, which may in turn help to explain why retailers do not use $9 price endings on every item.
228 citations