Revenue Management with Forward-Looking Buyers

S-Tier
Journal: Journal of Political Economy
Year: 2016
Volume: 124
Issue: 4
Pages: 1046 - 1087

Score contribution per author:

4.022 = (α=2.01 / 2 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

A seller wishes to sell multiple goods by a deadline, for example, the end of a season. Potential buyers enter over time and can strategically time their purchases. Each period, the profit-maximizing mechanism awards units to the buyers with the highest valuations exceeding a sequence of cutoffs. We show that these cutoffs are deterministic, depending only on the inventory and time remaining; in the continuous-time limit, the optimal mechanism can be implemented by posting anonymous prices. When incoming demand decreases over time, the optimal cutoffs satisfy a one-period-look-ahead property and prices are defined by an intuitive differential equation.

Technical Details

RePEc Handle
repec:ucp:jpolec:doi:10.1086/686713
Journal Field
General
Author Count
2
Added to Database
2026-01-24