Welcome to the new version of CaltechAUTHORS. Login is currently restricted to library staff. If you notice any issues, please email coda@library.caltech.edu
Published July 2008 | Accepted Version
Journal Article Open

Dynamic pricing with constant demand elasticity

Abstract

The model of Gallego and van Ryzin (1994) is specialized to the case of constant elasticity of demand. A closed form is developed, which has an even simpler form than that arising with exponential demand, and possesses an excellent approximation. It is shown in this environment that monopoly is efficient, which means that all the behavior usually attributed to monopoly pricing is actually a consequence of efficient pricing and would arise even in a perfectly competitive environment. If the initial supply is not too large, it is shown that consumers have no incentive to delay their purchases in order to get a lower price at the average inventory prevailing at any time.

Additional Information

Available under Creative Commons Attribution license. Author's final version as submitted. Appendix:Proofs. Also available from the author's website http://vita.mcafee.cc/PDF/DynamicPricingProofs.pdf

Attached Files

Accepted Version - Dynamic_Pricing__Final.pdf

Files

Dynamic_Pricing__Final.pdf
Files (120.9 kB)
Name Size Download all
md5:78ea49adf07a098f29614c2f9de5cff5
120.9 kB Preview Download

Additional details

Created:
September 14, 2023
Modified:
October 23, 2023