Dynamic Pricing Strategies for Multi-Product Revenue Management Problems
19 Pages Posted: 30 Aug 2011
Date Written: May 7, 2009
Abstract
This chapter reviews multi-product dynamic pricing models for a revenue maximizing monopolist firm. The baseline model studied in this chapter is of a seller that owns a fixed capacity of a resource that is consumed in the production or delivery of some type of product. The seller selects a dynamic pricing strategy for the offered product so as to maximize its total expected revenues over a finite time horizon. We then review how this model can be extended to settings where the firm is selling multiple products that consume this firm's capacity, and finally highlight a connection between these dynamic pricing models and the closely related model where prices are fixed, and the seller dynamically controls how to allocate capacity to requests for the different products. Methodologically, this chapter reviews the dynamic programming formulations of the above problems, as well as their associated deterministic (fluid) analogues. It highlights some of the key insights and pricing heuristics that are known for these problems, and briefly mentions possible extensions and areas of current interest.
Keywords: revenue management, dynamic pricing, fluid approximations, multi-product, capacity controls
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Inter-Temporal Pricing with Strategic Customer Behavior
By Xuanming Su
-
Strategic Customer Behavior, Commitment, and Supply Chain Performance
By Xuanming Su and Fuqiang Zhang
-
On the Value of Commitment and Availability Guarantees when Selling to Strategic Consumers
By Xuanming Su and Fuqiang Zhang
-
Online Auction and List Price Revenue Management
By Rene Caldentey and Gustavo Vulcano
-
By Rui Yin, Yossi Aviv, ...
-
Consumer Perceptions of Promotional Activity
By Aradhna Krishna, Imran S. Currim, ...
-
Buy Now and Match Later: The Impact of Posterior Price Matching on Profit with Strategic Consumers
By Guoming Lai, Laurens Debo, ...
-
Inter-temporal Pricing and Consumer Stockpiling
By Xuanming Su
-
Optimal Pricing with Speculators and Strategic Consumers
By Xuanming Su