Dissertation/Thesis Abstract

Dynamic pricing models with competition, production planning and consumer interaction
by Sadighian, Ali, Ph.D., Columbia University, 2009, 160; 3393596
Abstract (Summary)

This thesis consists of three essays that focus on different aspects of pricing mid production planning. We use techniques from dynamic programming and game theory to study the behavior of firms in different competitive and non-competitive settings. We develop dynamic programming models that account for pricing and production planing decisions of firms in such settings.

In Chapter 2, we study a joint pricing and production planning optimization problem for firms working under a subscription-based business model. Specifically, we consider the case of a magazine publishing firm that has two separate pricing decisions, the newsstand price and the subscription price. These decisions control the mechanism for customer subscription/attrition. We reduce the dynamic programming problem of the firm to a series of separate classical newsvendor problems and characterize the optimal price and production quantity decisions of the firms in both monopoly and duopoly settings. Moreover, we identify different types of equilibria that can emerge in the duopoly game. In Chapter 3, we consider games of newsvendor-type firms in an asymmetric competition. We categorize firms as pricesetters/price-takers and make-to-order/make-to-stock, depending on the price and quantity decisions available to them. We identify the equilibria of games in each setting and compare sequential and simultaneous games. In Chapter 4, we consider the customers who use historical pricing data to make their purchasing decision. This behavior is modelled using the concept of reference price, which quantifies customers' perceived " fair value" of a product. We consider a segmented market consisting of two types of customers. One segment uses all price history to form a reference point and the other only uses the current price to do so. We study the revenue maximization problem of a firm who offers a two-price scheme in this market. Finally, we extend our monopoly model to a duopoly setting and provide a numerical analysis on the added value of offering a two-price scheme compared to a single-price scheme.

Indexing (document details)
Advisor: Huh, Woonghee Tim, Kachani, Soulaymane
School: Columbia University
School Location: United States -- New York
Source: DAI-B 71/02, Dissertation Abstracts International
Subjects: Management, Economic theory, Operations research
Keywords: Competition, Consumer interaction, Magazine subscriptions, Production planning
Publication Number: 3393596
ISBN: 978-1-109-60471-9
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