A nonatomic-game approach to dynamic pricing under competition

Jian Yang, Yusen Xia

Research output: Contribution to journalArticlepeer-review

11 Scopus citations

Abstract

We study a revenue management problem involving competing firms. We assume the presence of a continuum of infinitesimal firms where no individual firm has any discernable influence over the evolution of the overall market condition. Under this nonatomic-game approach, the unanimous adoption of an equilibrium pricing policy by all firms will yield a market-condition process that in turn will elicit the said policy as one of the best individual responses. For both deterministic- and stochastic-demand cases, we show the existence of equilibrium pricing policies that exhibit well-behaving monotone trends. Our computational study reveals many useful insights, including the fact that only a reasonable number of firms are needed for our approach to produce near-rational pricing policies.

Original languageEnglish (US)
Pages (from-to)88-103
Number of pages16
JournalProduction and Operations Management
Volume22
Issue number1
DOIs
StatePublished - Jan 2013
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Management of Technology and Innovation

Keywords

  • competitive firms
  • dynamic pricing
  • fixed point
  • nonatomic games
  • revenue management

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