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Revenue Management with Forward-Looking Buyers

Author

Listed:
  • Andrzej Skrzypacz

    (Stanford GSB)

  • Simon Board

    (UCLA)

Abstract

We consider a seller who wishes to sell K goods by time T. Potential buyers enter IID over time and are forward-looking, so can strategically time their purchases. At any point in time, profit is maximized by awarding the good to the agent with the highest valuation exceeding a cutoff. These cutoffs are characterized by a one-period-look-ahead rule and are deterministic, depending only on the number of units and time remaining. The cutoffs decrease over time and in the inventory size, and are independent of the buyers' arrival times. In the continuous time limit, the seller's profits are maximized by posting anonymous prices, with an auction for the last unit at time T. Unlike the cutoffs, the optimal prices depend on the history of past sales.

Suggested Citation

  • Andrzej Skrzypacz & Simon Board, 2011. "Revenue Management with Forward-Looking Buyers," 2011 Meeting Papers 87, Society for Economic Dynamics.
  • Handle: RePEc:red:sed011:87
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    References listed on IDEAS

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    Cited by:

    1. Mustafa Dogan_, 2014. "Product Upgrades and Posted Prices," PIER Working Paper Archive 14-016, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    2. Hao Li & Xianwen Shi, 2013. "Discriminatory Information Disclosure," Working Papers tecipa-497, University of Toronto, Department of Economics.
    3. Hinnosaar, Toomas, 2017. "Calendar mechanisms," Games and Economic Behavior, Elsevier, vol. 104(C), pages 252-270.
    4. repec:eee:gamebe:v:104:y:2017:i:c:p:595-612 is not listed on IDEAS
    5. Aditya Bhave & Eric Budish, 2017. "Primary-Market Auctions for Event Tickets: Eliminating the Rents of 'Bob the Broker'?," NBER Working Papers 23770, National Bureau of Economic Research, Inc.
    6. 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.
    7. Zhiguo He & Gregor Matvos, 2016. "Debt and Creative Destruction: Why Could Subsidizing Corporate Debt Be Optimal?," Management Science, INFORMS, vol. 62(2), pages 303-325, February.
    8. Todd R. Kaplan & Shmuel Zamir, 2014. "Advances in Auctions," Discussion Papers 1405, University of Exeter, Department of Economics.
    9. Garrett, Daniel F., 2017. "Dynamic mechanism design: Dynamic arrivals and changing values," Games and Economic Behavior, Elsevier, vol. 104(C), pages 595-612.
    10. Raphael Boleslavsky & Maher Said, 2013. "Progressive Screening: Long-Term Contracting with a Privately Known Stochastic Process," Review of Economic Studies, Oxford University Press, vol. 80(1), pages 1-34.
    11. Artyom Shneyerov, 2014. "An optimal slow Dutch auction," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 57(3), pages 577-602, November.
    12. Rochet, Jean-Charles & Thanassoulis, John, 2017. "Intertemporal Price Discrimination with Multiple Products," CEPR Discussion Papers 12034, C.E.P.R. Discussion Papers.
    13. Qingmin Liu & Konrad Mierendorff & Xianwen Shi, 2013. "Auctions with Limited Commitment," Working Papers tecipa-504, University of Toronto, Department of Economics.

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