Competitive dynamic pricing under capacity constraints: An experimental study

Name: Competitive dynamic pricing under capacity constraints: An experimental study
Author: Bayram, A., Cesaret, Bahriye

İsim	Competitive dynamic pricing under capacity constraints: An experimental study
Yazar	Bayram, A., Cesaret, Bahriye
Basım Tarihi:	2024-07
Basım Yeri	- Sage
Konu	Behavioral operations, Revenue management, Competitive duopoly, Dynamic price competition
Tür	Süreli Yayın
Dil	İngilizce
Dijital	Evet
Yazma	Hayır
Kütüphane:	Özyeğin Üniversitesi
Demirbaş Numarası	1059-1478
Kayıt Numarası	a16c71fe-1412-4191-9ec2-66a6afd4d02b
Lokasyon	Business Administration
Tarih	2024-07
Notlar	University of Texas at Dallas (UT Dallas) ; TÜBİTAK ; Laboratory for Behavioral Operations and Economics at the Naveen Jindal School of Management
Örnek Metin	Keeping up with competitors' prices is one of the top operational challenges in pricing. However, competitive interactions in revenue management have not received much research attention in the past due to their complexity. We conduct a series of laboratory experiments to investigate the dynamic pricing behavior of two capacity-constrained firms under competition. Our experiments initially control for strategic interactions between the sellers and then allow for them. To gain a broader understanding, we also manipulate demand uncertainty and the expected market size. Our results confirm the dependency of dynamic pricing decisions on the competitor's behavior. We find that the theory is much more forgiving-in the sense that it predicts a lower level of competition among the sellers-than what we actually observe in the laboratory. The modeling literature indicates that the seller with the lower capacity has a competitive advantage, but our results reveal the opposite. Further, there is potential for high-capacity sellers to benefit from competition. Sellers tend to underprice (resp., overprice) their units at the beginning (resp., end) of a selling season. Also, competition lasts longer than the theory predicts, and customers benefit from the biases of the competing sellers. The higher-capacity seller following the best-response policy is not harmed due to the biases of the competitor. However, the lower-capacity seller's performance is greatly influenced by the competitor's degree of rationality.
DOI	10.1177/10591478241255667
Cilt	33

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Competitive dynamic pricing under capacity constraints: An experimental study

Yazar Bayram, A., Cesaret, Bahriye

Basım Tarihi 2024-07

Basım Yeri - Sage

Konu Behavioral operations, Revenue management, Competitive duopoly, Dynamic price competition

Tür Süreli Yayın

Dil İngilizce

Dijital Evet

Yazma Hayır

Kütüphane Özyeğin Üniversitesi

Demirbaş Numarası 1059-1478

Kayıt Numarası a16c71fe-1412-4191-9ec2-66a6afd4d02b

Lokasyon Business Administration

Tarih 2024-07

Notlar University of Texas at Dallas (UT Dallas) ; TÜBİTAK ; Laboratory for Behavioral Operations and Economics at the Naveen Jindal School of Management

Örnek Metin Keeping up with competitors' prices is one of the top operational challenges in pricing. However, competitive interactions in revenue management have not received much research attention in the past due to their complexity. We conduct a series of laboratory experiments to investigate the dynamic pricing behavior of two capacity-constrained firms under competition. Our experiments initially control for strategic interactions between the sellers and then allow for them. To gain a broader understanding, we also manipulate demand uncertainty and the expected market size. Our results confirm the dependency of dynamic pricing decisions on the competitor's behavior. We find that the theory is much more forgiving-in the sense that it predicts a lower level of competition among the sellers-than what we actually observe in the laboratory. The modeling literature indicates that the seller with the lower capacity has a competitive advantage, but our results reveal the opposite. Further, there is potential for high-capacity sellers to benefit from competition. Sellers tend to underprice (resp., overprice) their units at the beginning (resp., end) of a selling season. Also, competition lasts longer than the theory predicts, and customers benefit from the biases of the competing sellers. The higher-capacity seller following the best-response policy is not harmed due to the biases of the competitor. However, the lower-capacity seller's performance is greatly influenced by the competitor's degree of rationality.

DOI 10.1177/10591478241255667

Cilt 33