Ann Oper Res https://doi.org/10.1007/s10479-018-2916-x ORIGINAL RESEARCH Pricing policies for selling indivisible storable goods to strategic consumers 1 2 Gerardo Berbeglia · Gautam Rayaprolu · Adrian Vetta © Springer Science+Business Media, LLC, part of Springer Nature 2018 Abstract We study the dynamic pricing problem faced by a monopolistic retailer who sells a storable product to forward-looking consumers. In this framework, the two major pric- ing policies (or mechanisms) studied in the literature are the preannounced (commitment) pricing policy and the contingent (threat or history dependent) pricing policy. We analyse and compare these pricing policies in the setting where the good can be purchased along a ﬁnite time horizon in indivisible atomic quantities. First, we show that, given linear storage costs, the retailer can compute an optimal preannounced pricing policy in polynomial time by solving a dynamic program. Moreover, under such a policy, we show that consumers do not need to store units in order to anticipate price rises. Second, under the contingent pricing policy rather than the preannounced pricing mechanism, (i) prices could be lower, (ii) retailer revenues could be higher, and (iii) consumer surplus could be higher. This result is surprising, in that these three facts are in complete
Annals of Operations Research – Springer Journals
Published: Jun 4, 2018
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