Dynamic pricing with constant demand elasticity

McAfee, R. Preston and te Velde, Vera (2008) Dynamic pricing with constant demand elasticity. Production and Operations Management, 17 4: 432-438. doi:10.3401/poms.1080.0041

Author McAfee, R. Preston
te Velde, Vera
Title Dynamic pricing with constant demand elasticity
Journal name Production and Operations Management   Check publisher's open access policy
ISSN 1059-1478
Publication date 2008-07-19
Sub-type Article (original research)
DOI 10.3401/poms.1080.0041
Open Access Status
Volume 17
Issue 4
Start page 432
End page 438
Total pages 7
Place of publication Hoboken, NJ, United States
Publisher Wiley-Blackwell Publishing
Language eng
Abstract The celebrated model of Gallego and van Ryzin 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 which possesses an excellent approximation. In this environment, 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, consumers have no incentive to delay their purchases to get a lower price at the average inventory prevailing at any time.
Keyword Revenue management
Yield management
Dynamic pricing
Efficient pricing
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Non-UQ

Document type: Journal Article
Sub-type: Article (original research)
Collection: School of Economics Publications
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Citation counts: TR Web of Science Citation Count  Cited 8 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 17 times in Scopus Article | Citations
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Created: Wed, 21 Jan 2015, 15:22:19 EST by Alys Hohnen on behalf of School of Economics