A Dual Approach for Dynamic Pricing in Multidemand Markets

DOI10.1137/22M1535474MaRDI QIDQ6116232zbMATH OpenFDO

Authors Kristóf Bérczi, Erika R. Bérczi-Kovács

Publication date 11 August 2023

Published in SIAM Journal on Discrete Mathematics (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/2107.05131

zbMATH Keywords

dynamic pricing schememultidemand marketssocial welfare

Mathematics Subject Classification ID

Microeconomic theory (price theory and economic markets) (91B24) Consumer behavior, demand theory (91B42)

Abstract: Dynamic pricing schemes were introduced as an alternative to posted-price mechanisms. In contrast to static models, the dynamic setting allows to update the prices between buyer-arrivals based on the remaining sets of items and buyers, and so it is capable of maximizing social welfare without the need for a central coordinator. In this paper, we study the existence of optimal dynamic pricing schemes in combinatorial markets. In particular, we concentrate on multi-demand valuations, a natural extension of unit-demand valuations. The proposed approach is based on computing an optimal dual solution of the maximum social welfare problem with distinguished structural properties. Our contribution is twofold. By relying on an optimal dual solution, we show the existence of optimal dynamic prices in unit-demand markets and in multi-demand markets up to three buyers, thus giving new interpretations of results of Cohen-Addad et al. and Berger et al., respectively. Furthermore, we provide an optimal dynamic pricing scheme for bi-demand valuations with an arbitrary number of buyers. In all cases, our proofs also provide efficient algorithms for determining the optimal dynamic prices.

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Cited in

(8)

• Dynamic pricing and competitive time-to-market strategy of new product launch under a multistage duopoly
• Multiple markets: new perspective on nonlinear pricing
• A revisit to the markup practice of irreversible dynamic pricing
• Dual sourcing with price discovery
• On the power and limits of dynamic pricing in combinatorial markets
• Research Note: A Dynamic Programming Approach to Customer Relationship Pricing
• Dynamic and nonuniform pricing strategies for revenue maximization
• The stability analysis of the dynamic pricing strategy for bundling goods: a comparison between simultaneous and sequential pricing mechanism

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