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Counteracting Strategic Consumer Behavior in Dynamic Pricing Systems

  • Yossi Aviv
  • Yuri Levin
  • Mikhail Nediak
Chapter
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 131)

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 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag US 2009

Authors and Affiliations

  • Yossi Aviv
    • 1
  • Yuri Levin
    • 2
  • Mikhail Nediak
    • 2
  1. 1.Olin Business SchoolWashington UniversitySt. LouisUSA
  2. 2.School of BusinessQueen’s UniversityKingstonCanada

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