Learning about variable demand in the long run
This paper studies the problem of a monopoly who is uncertain about the demand it faces and learns about it over time through its pricing experience. The demand curve facing the monopoly is not constant - it changes over time in a Markovian fashion. We characterize the monopoly's optimal policy and inquire how it differs from an informed monopoly's policy. It turns out that, even when the rate at which the demand varies is negligible, the stationary probability with which the monopoly's policy deviates from its informed counterpart is non-negligible, as long as the discount factor is below 1.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Aghion Philippe & Bolton, Patrick & Harris Christopher & Jullien Bruno, 1991.
"Optimal learning by experimentation,"
CEPREMAP Working Papers (Couverture Orange)
- Balvers, Ronald J & Cosimano, Thomas F, 1990. "Actively Learning about Demand and the Dynamics of Price Adjustment," Economic Journal, Royal Economic Society, vol. 100(402), pages 882-898, September.
- Balvers, Ronald J. & Cosimano, Thomas F., 1993. "Periodic learning about a hidden state variable," Journal of Economic Dynamics and Control, Elsevier, vol. 17(5-6), pages 805-827.
- Nyarko, Yaw & Olson, Lars J., 1996.
"Optimal growth with unobservable resources and learning,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 29(3), pages 465-491, May.
- Nyarko, Yaw & Olson, Lars J., 1991. "Optimal Growth with Unobservable Resources and Learning," Working Papers 91-01, C.V. Starr Center for Applied Economics, New York University.
- McLennan, Andrew, 1984. "Price dispersion and incomplete learning in the long run," Journal of Economic Dynamics and Control, Elsevier, vol. 7(3), pages 331-347, September.
- Easley, David & Kiefer, Nicholas M, 1988. "Controlling a Stochastic Process with Unknown Parameters," Econometrica, Econometric Society, vol. 56(5), pages 1045-1064, September.
When requesting a correction, please mention this item's handle: RePEc:eee:dyncon:v:19:y:1995:i:5-7:p:1283-1292. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.