Title | ||
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Dynamic pricing with reference price effect and price-matching policy in the presence of strategic consumers |
Abstract | ||
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In this paper, we consider a retailer that sells a product with high storage cost over a two-period horizon. The goal is to investigate the single and combined effects of reference price and price-matching (PM) on the purchasing behavior of consumers and determine how these affect the retailer?s optimal pricing decisions and optimal total discounted revenue. We first present a discrete-time dynamic pricing (DP) model over a two-period horizon with a reference price effect in the presence of strategic consumers. Then we subsequently extended to another DP model in which the retailer implements a PM policy. The results show that under the reference price effect, the retailer?s revenue will always decrease, even when a PM policy is implemented. The PM policy is not always beneficial for the retailer, especially when the discount factor is infinitely close to 1. Second, we propose a model misspecification approach to investigate the effect of the reference price. Furthermore, the value of a PM policy is discussed. We find that the value of a PM policy is generally best when the discount factor is at a threshold value and also that the value of PM is much greater in the presence of strategic purchasing behavior. |
Year | DOI | Venue |
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2019 | 10.1080/01605682.2018.1510809 | JOURNAL OF THE OPERATIONAL RESEARCH SOCIETY |
Keywords | DocType | Volume |
Dynamic pricing,reference price effect,price-matching policy,two-period model,strategic consumers | Journal | 70.0 |
Issue | ISSN | Citations |
12.0 | 0160-5682 | 0 |
PageRank | References | Authors |
0.34 | 13 | 4 |
Name | Order | Citations | PageRank |
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Nenggui Zhao | 1 | 0 | 1.01 |
Qiang Wang | 2 | 237 | 37.93 |
Ping Cao | 3 | 17 | 4.55 |
jie wu | 4 | 327 | 47.55 |