Intertemporal service pricing with strategic customers

Authors:
Pengfei Guo;John J. Liu;Yulan Wang
Affiliations:
Department of Logistics and Maritime Studies, Hong Kong Polytechnic University, Hong Kong;Department of Logistics and Maritime Studies, Hong Kong Polytechnic University, Hong Kong;Department of Logistics and Maritime Studies, Hong Kong Polytechnic University, Hong Kong
Venue:
Operations Research Letters
Year:
2009

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Abstract

We study a two-period intertemporal pricing game in a single-server service system with forward-looking strategic customers who make their purchase decision based on current information and anticipated future gains. Subgame perfect Nash equilibrium (SPNE) prices are derived. A comparison between revenue-maximizing equilibrium prices and welfare-maximizing equilibrium prices is conducted and the impact on the system's performance of misunderstanding customers' type is evaluated.