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2007

Strategic customer behavior

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Intertemporal Pricing With Strategic Customer Behavior, Xuanming Su May 2007

Intertemporal Pricing With Strategic Customer Behavior, Xuanming Su

Operations, Information and Decisions Papers

This paper develops a model of dynamic pricing with endogenous intertemporal demand. In the model, there is a monopolist who sells a finite inventory over a finite time horizon. The seller adjusts prices dynamically to maximize revenue. Customers arrive continually over the duration of the selling season. At each point in time, customers may purchase the product at current prices, remain in the market at a cost to purchase later, or exit, and they wish to maximize individual utility. The customer population is heterogeneous along two dimensions: they may have different valuations for the product and different degrees of patience ...