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Dynamic pricing of electronic products with consumer reviews

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  • He, Qiao-Chu
  • Chen, Ying-Ju

Abstract

Consumer reviews have become pervasive for e-commerce in recent years, especially for electronic products. In this paper, we investigate the optimal pricing strategies for a platform selling electronic products when consumers sequentially learn about product quality from consumer reviews. We focus on the transient analysis to calibrate how information externalities across the time dimension would distort the seller’s optimal pricing strategies. Facing the “cold start” problem, the seller of high-quality products would choose lower prices to speed up the consumer learning process. Consequently, the optimal prices suffer from downward distortions that increase in product quality in this reputation-riding regime.

Suggested Citation

  • He, Qiao-Chu & Chen, Ying-Ju, 2018. "Dynamic pricing of electronic products with consumer reviews," Omega, Elsevier, vol. 80(C), pages 123-134.
    • Handle: RePEc:eee:jomega:v:80:y:2018:i:c:p:123-134
    DOI: 10.1016/j.omega.2017.08.014
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    References listed on IDEAS

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    4. Xue‐ge Guo & Yong Liu & Zhen‐juan Xia, 2023. "Decision analysis and coordination of dual supply chain with retailer's offline return service and online reviews," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 322-335, January.
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    7. Cui Zhao & Xiaoshuai Peng & Zhendong Li, 2023. "The influence of online customer reviews on two-stage product strategy in a competitive market," Annals of Operations Research, Springer, vol. 326(1), pages 411-503, July.
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    9. Qiu, Ruozhen & Sun, Yue & Zhou, Hongcheng & Sun, Minghe, 2023. "Dynamic pricing and quick response of a retailer in the presence of strategic consumers: A distributionally robust optimization approach," European Journal of Operational Research, Elsevier, vol. 307(3), pages 1270-1298.
    10. Sarkar, Biswajit & Dey, Bikash Koli, 2023. "Is online-to-offline customer care support essential for consumer service?," Journal of Retailing and Consumer Services, Elsevier, vol. 75(C).
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    13. Yang, Wenjuan & Zhang, Jiantong & Yan, Hong, 2021. "Impacts of online consumer reviews on a dual-channel supply chain," Omega, Elsevier, vol. 101(C).

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