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Competitive Pricing in a Multi‐Product Multi‐Attribute Environment
Author(s) -
Kachani Soulaymane,
Shmatov Kyrylo
Publication year - 2011
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/j.1937-5956.2010.01195.x
Subject(s) - monopolistic competition , computer science , oligopoly , mathematical optimization , focus (optics) , product (mathematics) , convergence (economics) , market segmentation , dynamic pricing , relaxation (psychology) , microeconomics , economics , mathematics , monopoly , physics , geometry , cournot competition , optics , economic growth , psychology , social psychology
We address the problem of simultaneous pricing of a line of several products, both complementary products and substitutes, with a number of distinct price differentiation classes for each product (e.g., volume discounts, different distribution channels, and customer segments) in both monopolistic and oligopolistic settings. We provide a generic framework to tackle this problem, consider several families of demand models, and focus on a real‐world case‐study example. We propose an iterative relaxation algorithm, and state sufficient conditions for convergence of the algorithm. Using historical sales and price data from a retailer, we apply our solution algorithm to suggest optimal pricing, and report on numerical results.