Optimal price skimming by a monopolist facing rational consumers
Management Science
Intertemporal Pricing with Strategic Customer Behavior
Management Science
Strategic Capacity Rationing to Induce Early Purchases
Management Science
Optimal Pricing of Seasonal Products in the Presence of Forward-Looking Consumers
Manufacturing & Service Operations Management
When Is Price Discrimination Profitable?
Management Science
A randomized pricing decision support system in electronic commerce
Decision Support Systems
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In Internet-based commerce, sellers often use multiple distribution channels for the sale of standard consumer goods. We study a model of second-degree price discrimination in which a monopolist sells to risk-averse buyers. The seller uses two channels that differ in their risk attributes. In one channel prices and qualities are fixed and availability is assured. In the second channel, the seller offers a joint distribution of prices and qualities and may not guarantee availability. We characterize optimal two-channel selling policies. We show that it can be optimal to offer multiple identical items in a random sale event. However, the seller cannot benefit by offering two distinct quality levels in a sale event that is held with probability smaller than one. We use the model to offer explanations for the observed behavior of online sellers and discuss implementation issues in recent e-commerce environments.