Revenue management under randomly evolving economic conditions

Yusen Xia, Jian Yang and Tingting Zhou

Naval Research Logistics (NRL), 2019, vol. 66, issue 1, 73-89

Abstract: We consider a dynamic pricing model in which the instantaneous rate of the demand arrival process is dependent on not only the current price charged by the concerned firm, but also the present state of the world. While reflecting the current economic condition, the state evolves in a Markovian fashion. This model represents the real‐life situation in which the sales season is relatively long compared to the fast pace at which the outside environment changes. We establish the value of being better informed on the state of the world. When reasonable monotonicity conditions are met, we show that better present economic conditions will lead to higher prices. Our computational study is partially calibrated with real data. It demonstrates that the benefit of heeding varying economic conditions is on par with the value of embracing randomness in the demand process. © 2015 Wiley Periodicals, Inc. Naval Research Logistics 66:73–89,2019

Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1002/nav.21635

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:navres:v:66:y:2019:i:1:p:73-89

Access Statistics for this article

More articles in Naval Research Logistics (NRL) from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().