Article
Management
Jose Correa, Dana Pizarro, Gustavo J. Vulcano
Summary: In this dynamic pricing problem, a firm aims to maximize expected revenue by selling one item to a buyer. The firm determines a price function over an infinite horizon. The buyer, who has a private value for the item, strategizes over the timing of the purchase to maximize expected utility. The value of the seller's ability to observe the buyer's arrival time in terms of expected revenue is analyzed.
MANAGEMENT SCIENCE
(2023)
Article
Business
Alisa Keller, Mila Vogelsang, Dirk Totzek
Summary: Dynamic pricing has the potential to increase retailers' profits, but it also risks negative customer reactions. This study finds that customers react negatively to dynamic pricing due to norm violation, but this can be mitigated by displaying prices as high discounts. Additionally, customers focus on the general pricing process when evaluating specific transactions in a dynamic pricing context, highlighting the importance of distributive and procedural fairness.
JOURNAL OF BUSINESS RESEARCH
(2022)
Article
Green & Sustainable Science & Technology
Michael S. Pangburn, Euthemia Stavrulaki
Summary: This study uses an analytic model to determine the optimal prices and quantities for a firm offering product-refresh services, and finds that even if the direct profit contribution of such services is negative, they can still have a positive impact on overall profits by increasing selling prices. Managers should consider the contribution of product refresh services holistically, including indirect price effects.
Article
Information Science & Library Science
Genevieve Bassellier, Jui Ramaprasad
Summary: External reference prices (ERPs) are recognized as influencing consumers' payment for physical goods. This study focuses on the role of ERPs in a digital goods context and examines the effects of ERP magnitude and source. Using a laboratory experiment with 471 participants, the study finds that an increase in ERP results in higher payment for digital songs. The source of the ERP, such as a recommended price by the site, and the perceived fairness of the ERP also influence consumers' willingness to pay.
INFORMATION SYSTEMS RESEARCH
(2023)
Article
Management
Ehsan Bolandifar, Zhong Chen, Panos Kouvelis, Weihua Zhou
Summary: This study investigates an entrepreneur's pricing strategy in a reward-based crowdfunding campaign with asymmetric product quality information. It proposes two signaling mechanisms to help entrepreneurs signal a high-quality project. The research is significant in practice as asymmetric quality information is a concern in reward-based crowdfunding. The findings suggest practical tools for quality signaling and explore the conditions under which price commitment is most beneficial for high-quality entrepreneurs.
M&SOM-MANUFACTURING & SERVICE OPERATIONS MANAGEMENT
(2023)
Article
Business
Marco Alderighi, Consuelo R. Nava, Matteo Calabrese, Jean-Marc Christille, Chiara B. Salvemini
Summary: The extensive use of online travel agencies has increased the number of consumers who directly experience and evaluate how hotels implement dynamic pricing. Research has found that dynamic pricing has a negative effect on price fairness, with consumers being more sensitive to price differences among weeks of stay and room types.
JOURNAL OF BUSINESS RESEARCH
(2022)
Article
Business
David Prakash, Martin Spann
Summary: Dynamic pricing allows online retailers to adjust prices based on demand and supply conditions. This paper investigates the impact of dynamic pricing on consumers' assessment of current prices. The findings reveal that customers are more sensitive to price increases than price reductions. Higher amplitude and frequency of price changes attenuate the internal reference price effects.
JOURNAL OF BUSINESS RESEARCH
(2022)
Article
Management
Zhuoqiong Chen, Christopher Stanton, Catherine Thomas
Summary: Trialing an experience good informs consumers’ beliefs about their value for similar products and creates a well-informed group of potential future consumers for rival firms. In new product categories that build on major innovations, firms can set a low initial price to attract inexperienced consumers, while still profiting from switchers and repeat buyers through price discrimination based on purchasing history. Competing products and services arising from new innovations can make overall profits even when selling products that consumers perceive to be indistinguishable prior to initial trial.
MANAGEMENT SCIENCE
(2023)
Article
Management
Ayelet Israeli, Fiona Scott-Morton, Jorge Silva-Risso, Florian Zettelmeyer
Summary: This study demonstrates that market power significantly affects the ability of automotive dealerships to dynamically adjust prices based on inventory levels. Dealers with higher market power experience more significant price declines when transitioning from inventory shortages to median inventory levels, while those facing more intense competition see smaller price reductions in the same transition.
MANAGEMENT SCIENCE
(2022)
Article
Engineering, Chemical
Po-Yu Chen
Summary: This study examines the impact of historical transaction price information on the market demand function for exquisite products, analyzing how different diffusion rates affect the adjustment of customers' internal reference prices. By establishing a dynamic demand function and sales price control model, it provides businesses with an operational method to adjust prices and increase profitability.
Article
Business
Silke Bambauer-Sachse, Ashley Young
Summary: This paper examines the effects of dynamic pricing versus simple price differentiation for services on price-disadvantaged consumers' intentions to spread negative word of mouth (WOM) through price confusion and price unfairness perceptions. The findings indicate that dynamic pricing leads to more price confusion than simple differential pricing, which triggers price unfairness perceptions and increases consumers' intentions to spread negative WOM. The effects of pricing tactics on negative WOM intentions vary based on service purchase frequency, with price confusion being the main driver for frequently purchased services and unfairness perceptions being the main driver for infrequently purchased services. The major managerial insight is to avoid or limit the use of dynamic pricing when there is a high likelihood of reputation damage through negative WOM among price-disadvantaged customers.
JOURNAL OF SERVICE RESEARCH
(2023)
Article
Management
Arnoud den Boer, N. Bora Keskin
Summary: This study considers a seller's dynamic pricing problem with demand learning and reference effects. The research focuses on loss-averse customers who have a reference price that can vary over time. The study designs and analyzes a policy for the seller to slowly change the selling price and accumulate sales data to control the evolution of the reference price and balance the trade-off between learning and earning. The study proves the asymptotic optimality of the policy under various reference-price updating mechanisms and extends the analysis to fixed reference price cases.
MANAGEMENT SCIENCE
(2022)
Article
Engineering, Industrial
Dongfan Wang, Zhen He, Shuguang He, Zhaomin Zhang, Yiwen Zhang
Summary: The paper proposes a dynamic integration model to address the issue of optimal extended warranty pricing strategy for dealers in a dynamic market, combining reliability engineering factors and market elements, and analyzing their effects on dealer profit.
RELIABILITY ENGINEERING & SYSTEM SAFETY
(2021)
Article
Management
Keita Sogo, Nobuo Matsubayashi
Summary: This study examines the production and pricing strategy of a monopoly firm in the presence of the snob effect, finding that consumer sensitivity to stockouts, consumer discount factor on past shortages, and firm's discount factor on future profits influence the optimal dynamic paths of price and output level, with total profit monotonically increasing with the degree of consumer sensitivity to stockouts.
INTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH
(2021)
Article
Social Sciences, Interdisciplinary
Ya-Ling Chiu, Jiangze Du, Jying-Nan Wang
Summary: Price dispersion is an important indicator of pricing strategy and market efficiency. This study uses transaction data from Autohome to assess the extent of price dispersion in the new automobile market. The findings suggest that price dispersion has a positive impact on sales, but with a negative quadratic relationship.
Article
Engineering, Manufacturing
Yu-Hung Chen, Baojun Jiang
PRODUCTION AND OPERATIONS MANAGEMENT
(2019)
Article
Management
Yu-Hung Chen, Ling-Chieh Kung, Jiun-Yu Yu, Hsin-Jung Tsai, Yu Jen Wang
Summary: This paper examines the contracting problem between a medical equipment vendor and a hospital in the healthcare industry. The study shows how vendors can use revenue sharing as a signaling device of reliability to prevent hospitals from underpaying for reliable equipment. Furthermore, vendors are better able to signal their reliability through revenue sharing to non-profit hospitals than to for-profit hospitals.
JOURNAL OF THE OPERATIONAL RESEARCH SOCIETY
(2022)
Article
Business, Finance
Ju-Chun Yen, Tawei Wang, Yu-Hung Chen
Summary: The study found that ICOs with more unique or less common content in their white papers are related to ICO fund raising and post-ICO trading activities, and tend to perform better in the market.
ACCOUNTING AND FINANCE
(2021)