Product line pricing for services with capacity constraints and dynamic substitution

Wolfgang R. Burkart, Robert Klein and Stefan Mayer

European Journal of Operational Research, 2012, vol. 219, issue 2, 347-359

Abstract: In this paper, we address a service provider’s product line pricing problem for substitutable products in services, such as concerts, sporting events, or online advertisements. For each product, a static price is selected from a pre-defined set such that the total revenue is maximised. The products are differentiated by some of their attributes, and their availability is restricted due to individual capacity constraints. Furthermore, they are simultaneously sold during a common selling period at the end of which the service is delivered. Consumers differ from one another with respect to their willingness to pay, and, hence, their reservation prices vary depending on the product. In the event of a purchase, they choose the product that maximises their consumer surplus.

Keywords: Pricing; Mixed-integer programming; Branch and bound; Heuristics (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:219:y:2012:i:2:p:347-359

DOI: 10.1016/j.ejor.2011.12.026

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