A continuous model for dynamic pricing under costly price modifications

Daşcı, Abdullah and Huang, Rongbing (2013) A continuous model for dynamic pricing under costly price modifications. [Working Paper / Technical Report] Sabanci University ID:UNSPECIFIED

[thumbnail of Working paper] PDF (Working paper)

Download (227kB)


This paper presents a heuristic method to solve a dynamic pricing problem under costly price modifications. This is a remarkably difficult problem that is solvable only under very few special cases. The method is applied to a more general form of the problem and is numerically tested for a variety of demand functions in the literature. The results show that the method is quite accurate, approximating the optimal profit within usually much less than 1\%. A more important result is that the accuracy tend to be much greater as the number of price changes increases, precisely when the underlying optimization problem becomes much harder, which makes this approach particularly desirable.
Item Type: Working Paper / Technical Report
Uncontrolled Keywords: Revenue management, dynamic pricing, continuous approximation
Divisions: Sabancı Business School
Sabancı Business School > Operations Management and Information Systems
Depositing User: Abdullah Daşcı
Date Deposited: 09 Jan 2014 16:11
Last Modified: 26 Apr 2022 10:51
URI: https://research.sabanciuniv.edu/id/eprint/23540

Actions (login required)

View Item
View Item