Counteracting Strategic Consumer Behavior in Dynamic Pricing Systems

Yossi Aviv, Yuri Levin and Mikhail Nediak
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Yossi Aviv: Washington University
Yuri Levin: Queen’s University
Mikhail Nediak: Queen’s University

Chapter Chapter 12 in Consumer-Driven Demand and Operations Management Models, 2009, pp 323-352 from Springer

Abstract: Abstract Dynamic pricing and revenue management practices are gaining increasing popularity in the retail industry, and have engendered a large body of academic research in recent decades. When applying dynamic pricing systems, retailers must account for the fact that, often, strategic customers may time their purchases in anticipation of future discounts. Such strategic consumer behavior might lead to severe consequences on the retailers’ revenues and profitability. Researchers have explored several approaches for mitigating the adverse impact of this phenomenon, such as rationing capacity, making price and capacity commitments, using internal price-matching policies, and limiting inventory information. In this chapter, we present and discuss some relevant theoretical contributions in the management science literature that help us understand the potential value of the above mitigating strategies.

Keywords: Discount Price; Revenue Management; Price Guarantee; Subgame Perfect Nash Equilibrium; Expected Revenue (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1007/978-0-387-98026-3_12

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