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A Model of Non-Stationary Dynamic Price Competition with an Application to Platform Design

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  • Andrew Sweeting

    (Department of Economics, University of Maryland, College Park, MD 20742, USA)

Abstract

I develop a tractable framework for conducting platform design counterfactuals in settings where many sellers compete and set prices dynamically, using approaches developed in the recent literature on Oblivious Equilibria. As an initial application, I use the model to study a simple platform design counterfactual using data from the secondary event ticket market on Stubhub.com where the perishability of the product being sold results in sellers facing a dynamic and non-stationary pricing problem. Currently, most transactions happen at low prices close to the event. Motivated by some simple theoretical examples, I investigate how the dynamics of prices, the timing of transactions, platform revenues and participant surplus would be a affected if a commission structure that encouraged earlier transactions was introduced.

Suggested Citation

  • Andrew Sweeting, 2015. "A Model of Non-Stationary Dynamic Price Competition with an Application to Platform Design," Working Papers 15-03, NET Institute.
    • Handle: RePEc:net:wpaper:1503
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    References listed on IDEAS

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    Cited by:

    1. Caio Waisman, 2021. "Selling mechanisms for perishable goods: An empirical analysis of an online resale market for event tickets," Quantitative Marketing and Economics (QME), Springer, vol. 19(2), pages 127-178, June.

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    More about this item

    Keywords

    dynamic pricing; platform; non-stationary equilibrium; perishable goods;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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