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On Dynamic Pricing

Author

Listed:
  • Ilia Krasikov
  • Rohit Lamba

Abstract

This paper builds a theory of dynamic pricing for the sale of timed goods. The main friction is private and evolving valuation of the buyer prior to the date of consumption, which follows a Poisson process. A combination of membership fees and continuously increasing prices induces a threshold response from the buyer, endogenously segmenting the market along timing of purchase. This pricing mechanism achieves the deterministic global optimum. The tools developed here are shown to be useful in thinking about global incentives in dynamic mechanisms, and mapping dynamic pricing to the classic taxonomy of consumer-producer surplus and deadweight loss.

Suggested Citation

  • Ilia Krasikov & Rohit Lamba, 2026. "On Dynamic Pricing," American Economic Journal: Microeconomics, American Economic Association, vol. 18(1), pages 174-207, February.
    • Handle: RePEc:aea:aejmic:v:18:y:2026:i:1:p:174-207
    DOI: 10.1257/mic.20220124
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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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