publication . Preprint . Article . 2012

Optimal Advance Selling Strategy under Price Commitment

Chenhang Zeng;
Open Access
  • Published: 01 Dec 2012
Abstract
This paper considers a two-period model with experienced consumers and inexperienced consumers. The retailer determines both advance selling price and regular selling price at the beginning of the first period. I show that advance selling weekly dominates no advance selling, and the optimal advance selling price may be at a discount, at a premium or at the regular selling price. To help the retailer choose the optimal pricing strategy, conditions for each possible advance selling strategy to outperform others are characterized. Furthermore, how the consumer composition affects the retaileri¯s optimal pricing strategy and profit are examined. In the extension, a ...
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ACM Computing Classification System: TheoryofComputation_MISCELLANEOUS
free text keywords: advance selling, price commitment, endogenous price, demand uncertainty, experienced consumers., Economics and Econometrics, jel:C72, jel:D42, jel:L12, jel:M31, Price premium, Economics, Special case, Valuation (finance), Microeconomics, Incentive
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