AbstractWe study the efficiency property of responsive pricing - a scheme first proposed by Vickrey - that increases prices as a function of capacity utilization. We show that although responsive pricing implements allocations that are arbitrarily close to market clearing, these allocations are not always efficient. We identify conditions under which efficiency occurs and discuss implications for the use of responsive pricing.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4036.
Date of creation: Aug 2003
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Other versions of this item:
- D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
This paper has been announced in the following NEP Reports:
- NEP-IND-2003-09-28 (Industrial Organization)
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