publication . Article . 1994

Nonlinear Pricing to Produce Information

David J. Braden; Shmuel S. Oren;
Open Access
  • Published: 01 Jan 1994 Journal: Marketing Science, volume 13, issue 3, pages 310-326
Abstract
We investigate the firm's dynamic nonlinear pricing problem when facing consumers whose tastes vary according to a scalar index. We relax the standard assumption that the firm knows the distribution of this index. In general the firm should determine its marginal price schedule as if it were myopic, and produce information by lowering the price schedule; “bunching” consumers at positive purchase levels should be avoided. As a special case we also consider a market characterized by homogeneous consumers with a static, but unknown, demand curve. We show that when there are repeat purchases the forward-looking firm should tend towards penetration pricing; otherwise...
Subjects
free text keywords: pricing, segmentation
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