Mathematical structure of a bilevel strategic pricing model

Patrice Marcotte, Gilles Savard and Daoli Zhu

European Journal of Operational Research, 2009, vol. 193, issue 2, 552-566

Abstract: This paper is concerned with the characterization of optimal strategies for a service firm acting in an oligopolistic environment. The decision problem is formulated as a leader-follower game played on a transportation network, where the leader firm selects a revenue-maximizing price schedule that takes explicitly into account the rational behavior of the customers. In the context of our analysis, the follower's problem is associated with a competitive network market involving non atomic customer groups. The resulting bilevel model can therefore be viewed as a model of product differentiation subject to structural network constraints.

Keywords: Pricing; Productivity; and; competitiveness; Revenue; management; Economics; Game; theory (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:193:y:2009:i:2:p:552-566

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