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Intertemporal Pricing with Unobserved Consumer Arrival Times

Author

Listed:
  • Philippe Choné

    () (CREST)

  • Romain De Nijs

    () (CREST & UC Berkeley)

  • Lionel Wilner

    () (CREST-INSEE 104 rue de la Convention 75015 Paris Tél : 06 22 82 56 26)

Abstract

We examine optimal selling mechanisms with ex-ante commitment for a nondurable good when the seller does not observe the times at which strategic consumers arrive on the market and how much they are willing to pay for the good. Assuming consumer risk neutrality, we demonstrate in this two-dimensional screening problem that stochastic mechanisms are suboptimal. In practice, this means that quantity rationing and behavior-based price discrimination do not improve the profit compared to a simple time-dependent price schedule. We explain how the optimal profit may be achieved with a first-come first-served policy

Suggested Citation

  • Philippe Choné & Romain De Nijs & Lionel Wilner, 2012. "Intertemporal Pricing with Unobserved Consumer Arrival Times," Working Papers 2012-23, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:2012-23
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    References listed on IDEAS

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    1. Pascal Courty & Li Hao, 2000. "Sequential Screening," Review of Economic Studies, Oxford University Press, vol. 67(4), pages 697-717.
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    3. Gauthier, Stéphane & Laroque, Guy, 2014. "On the value of randomization," Journal of Economic Theory, Elsevier, vol. 151(C), pages 493-507.
    4. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, January.
    5. Simon Board, 2008. "Durable-Goods Monopoly with Varying Demand," Review of Economic Studies, Oxford University Press, vol. 75(2), pages 391-413.
    6. Gale, Ian L & Holmes, Thomas J, 1993. "Advance-Purchase Discounts and Monopoly Allocation of Capacity," American Economic Review, American Economic Association, vol. 83(1), pages 135-146, March.
    7. Ioana Chioveanu & Jidong Zhou, 2013. "Price Competition with Consumer Confusion," Management Science, INFORMS, pages 2450-2469.
    8. Simon Board & Andrzej Skrzypacz, 2016. "Revenue Management with Forward-Looking Buyers," Journal of Political Economy, University of Chicago Press, vol. 124(4), pages 1046-1087.
    9. Armstrong, Mark & Zhou, Jidong, 2010. "Exploding offers and buy-now discounts," MPRA Paper 22531, University Library of Munich, Germany.
    10. Volker Nocke & Martin Peitz, 2007. "A Theory of Clearance Sales," Economic Journal, Royal Economic Society, vol. 117(522), pages 964-990, July.
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    12. Marc Möller & Makoto Watanabe, 2010. "Advance Purchase Discounts Versus Clearance Sales," Economic Journal, Royal Economic Society, vol. 120(547), pages 1125-1148, September.
    13. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    14. Wilson, Charles A, 1988. "On the Optimal Pricing Policy of a Monopolist," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 164-176, February.
    15. Nancy L. Stokey, 1979. "Intertemporal Price Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 355-371.
    16. Gershkov, Alex & Moldovanu, Benny, 2012. "Dynamic allocation and pricing: A mechanism design approach," International Journal of Industrial Organization, Elsevier, vol. 30(3), pages 283-286.
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    Cited by:

    1. X. Dhaultfoeuille & P. Fevrier & L. Wilner, 2012. "Demand Estimation in the Presence of Revenue Management," Documents de Travail de la DESE - Working Papers of the DESE g2012-13, Institut National de la Statistique et des Etudes Economiques, DESE.

    More about this item

    Keywords

    Intertemporal pricing; Strategic consumers; Arrival dates; Heterogeneous cohorts; two-dimensional screening;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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