A Special Case of Dynamic Pricing Policy

Birger Wernerfelt

Management Science, 1986, vol. 32, issue 12, 1562-1566

Abstract: This article studies the implications of experience curves and brand loyalty for optimal dynamic pricing policy. In a continuous time model, we synthesize several results from the literature on open loop equilibria. Specifically, we show that prices should decrease over time for high discount rates and steeper exogenous declines in variable costs. Conversely, the prices should increase over time if experience curves affect fixed costs and if consumers are brand loyal.

Keywords: marketing; marketing: pricing (search for similar items in EconPapers)
Date: 1986
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:32:y:1986:i:12:p:1562-1566

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