Optimal pricing of a conspicuous product during a recession that freezes capital markets

J.P. Caulkins, Gustav Feichtinger, D. Grass, R.F. Hartl and Peter Kort
Additional contact information
J.P. Caulkins: H. John Heinz III School of Public Policy & Management - H. John Heinz III School of Public Policy & Management
D. Grass: Department for Operations Research and Control Systems - TU Wien - Vienna University of Technology = Technische Universität Wien
R.F. Hartl: Universität Wien = University of Vienna

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Abstract: This paper considers the problem of how to price a conspicuous product when the economy is in a recession that disrupts capital markets. A conspicuous product in this context is a luxury good for which demand is increasing in brand image. Brand image here means the ability of a consumer to impress observers by conspicuously displaying consumption of the good. Brand image is built up when the good is priced high enough to make it exclusive, and eroded if the good is discounted.

Keywords: C61; M31; Pricing; Recession; Conspicuous product; Optimal control; Skiba point (search for similar items in EconPapers)
Date: 2010-11-17
Note: View the original document on HAL open archive server: https://hal.science/hal-00753047v1
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Published in Journal of Economic Dynamics and Control, 2010, 35 (1), pp.163. ⟨10.1016/j.jedc.2010.09.001⟩

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Journal Article: Optimal pricing of a conspicuous product during a recession that freezes capital markets (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00753047

DOI: 10.1016/j.jedc.2010.09.001

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