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
It’s your single place to instantly
discover and read the research
that matters to you.
Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.
All for just $49/month
Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly
Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.
All the latest content is available, no embargo periods.
“Whoa! It’s like Spotify but for academic articles.”@Phil_Robichaud