The stochastic nature of demand suggests that firms can benefit from applying dynamic pricing strategies, where pricing decisions are postponed until information about demand is revealed. Many service providers, however, announce prices in advance and do not frequently adjust them as a response to market conditions (i.e., static pricing). This may seem suboptimal when demand is high and the fir...

Economists have long advocated congestion pricing as an efficient way of allocating scarce roadway capacity. However, with a few exceptions, congestion tolls are rarely used in practice and strongly opposed by the public and elected officials. Although high implementation costs and privacy issues are alleviated as appropriate technologies are developed, the concerns that congestion pricing will...

We consider the problem of pricing for bandwidth provisioning over a single link, where users arrive according to a known stochastic traffic model. The network administrator controls the resource allocation by setting a price at every epoch, and each user’s response to the price is governed by a demand function. We formulate this problem as a partially observable Markov decision process (POMDP)...

Static optimization of networks by pricing has attracted significant attention over the last decade. These studies assumed concave utility functions for users and derived optimal pricing strategies for the network provider. In this paper, we consider effect of user’s elasticity to price and bandwidth on optimality of pricing. We first derive optimal pricing strategy for the case of logarithmic ...

This paper studies a one-shot inventory replenishment problem with dynamic pricing. The customer arrival rate is assumed to follow a geometric Brownian motion. Homogeneous customers have an isoelastic demand function and do not behave strategically. We find a closed-form optimal pricing policy, which utilizes current demand information. Under this pricing policy the inventory trajectory is dete...

The recent developments in information technology (IT) have enabled firms to employ personalized pricing. Should all firms employ personalized pricing even though the adaptation costs of such pricing strategies are not high? This paper theoretically demonstrates a situation in which all firms do not always employ personalized pricing even though the fixed costs to do so is zero. The model is ba...

Software pricing has traditionally been focused on the vendor’s internal business objectives of covering costs, achieving specified margins, and meeting the competition. Pricing methods such as flat price, tiered pricing, MIPS-based, usage-based, per user, per seat, and pay as you go, are often tactical in nature and easily matched by competitors, which can undermine profitability by accelerati...

This paper analyzes optimal pricing for information goods under incomplete information, when both unlimited-usage (fixed-fee) pricing and usage-based pricing are feasible. For a general set of customer characteristics, it is shown that in the presence of contract administration costs, offering fixed-fee pricing in addition to a non-linear usage-based pricing scheme is always profitimproving, an...

pricing of goods and services are one of the fundamental instrument of competition and prerequisite for a competetive market is the right to determine prices freely by undertakimgs. competition law has declared discriminative pricing as an anticompetetive practices in many jurisdiction while analysis specially in the scope of intellectual property rights shows that many form of price discrimina...