EconPapers    
Economics at your fingertips  
 

Inter-temporal price discrimination and satiety-driven repeat purchases

Zhiyuan Chen, Xiaoying Liang and Lei Xie

European Journal of Operational Research, 2016, vol. 251, issue 1, 225-236

Abstract: We discuss customers’ inter-temporal repeat-purchasing behavior when their valuations for a product are subject to transitory satiety. The satiety can be increased by purchases and gradually decays in between. Repeat-purchasing customers optimize their inter-temporal purchasing schedules, including the purchasing time and the purchasing quantity, to maximize their time-average payoffs, and the monopoly seller chooses the optimal cyclic pricing policy to maximize its time-average profit. We derive the conditions under which firms earn the same profit under the cyclic pricing policy as under the fixed-price pricing policy. When the inter-temporal price discrimination is more profitable, we show that the optimal pricing policy depends on the relation between customer valuation and customer satiety. Our results imply that overlooking the effect of transitory satiety tends to cause firms to underprice. We also consider extensions in which there exists a fixed purchasing cost or in which purchasing and consumption decisions are separate.

Keywords: Repeat purchase; Transitory satiety; Inter-temporal price discrimination (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377221715009923
Full text for ScienceDirect subscribers only

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:eee:ejores:v:251:y:2016:i:1:p:225-236

DOI: 10.1016/j.ejor.2015.10.066

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-19
Handle: RePEc:eee:ejores:v:251:y:2016:i:1:p:225-236