Responsive pricing. (English) Zbl 1211.91125
Summary: We study the efficiency property of responsive pricing, a scheme that proposes to increase prices as a function of the level of capacity utilization in environments where traditional allocation schemes (e.g. competitive markets, non-linear pricing) cannot be implemented in practice. We show that although responsive pricing implements allocations that are arbitrarily close to full capacity utilization (no wasted capacity and no excess demand), these allocations are not always efficient. We identify conditions under which efficiency occurs and discuss implications for the use of responsive pricing.
MSC:
| 91B24 | Microeconomic theory (price theory and economic markets) |
References:
| [1] | Barro R., Romer P. (1987) Ski-lift pricing, with applications to labor and other markets. Am Econ Rev 77, 875–890 |
| [2] | Bohn R.E., Caramanis M.C., Schweppe F.C. (1984) Optimal pricing in electrical networks over space and time. RAND J Econ 15, 360–376 · doi:10.2307/2555444 |
| [3] | Boiteux M. (1956) Sur la Gestion des Monopoles Publics Astreints a l’Equilibre Budgetaire. Econometrica 24, 22–40 · Zbl 0071.14101 · doi:10.2307/1905256 |
| [4] | Boiteux M. (1960) Peak load pricing. J Business 33, 157–179 · doi:10.1086/294331 |
| [5] | Borenstein S.: Frequently asked questions about implementing real-time electricity pricing in California for summer 2001. Mimeo, University of Berkeley, (2001) |
| [6] | Crew M.A., Fernando C.S., Kleindorfer P.R. (1995) The Theory of peak-load pricing: a survey. J Regulat Econ 8, 215–48 · doi:10.1007/BF01070807 |
| [7] | Courty P., Pagliero M.: Estimating the Welfare Gains From Real Time Pricing: Evidence from an Internet café. CEPR Discussion Paper 4149 (2003) |
| [8] | Falkner M., Devetsikiotis M., Lambradaris I. (2000) An overview of pricing concepts for broadband IP networks. IEEE Commun Surv 3, 2–13 · doi:10.1109/COMST.2000.5340798 |
| [9] | Harris M., Raviv A. (1981) A theory of monopoly pricing schemes with demand uncertainty. Am Econ Rev 71, 347–365 |
| [10] | Joskow P., Tirole J. (2004) Retail electricity competition. Mimeo. Cambridge, MIT |
| [11] | MacKie-Mason J., Varian H.R. (1995) Pricing congestible network resources. IEEE JSAC 13, 1141–49 |
| [12] | Mendelson H., Whang S. (1990) Optimal incentive-compatible priority pricing for the M/M/1 queue. Operat Res 38, 870–883 · Zbl 0723.90023 · doi:10.1287/opre.38.5.870 |
| [13] | Oren S.S., Smith S.S., Wilson R.B. (1985) Capacity pricing. Econometrica 53, 545–567 · Zbl 0563.90012 · doi:10.2307/1911654 |
| [14] | Vickrey W. (1971) Responsive pricing of public utility services. Bell J Econ Manage Sci 2, 337–346 · doi:10.2307/3003171 |
| [15] | Wilson R.B. (1993) Nonlinear Pricing. Oxford, Oxford University Press |
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. In some cases that data have been complemented/enhanced by data from zbMATH Open. This attempts to reflect the references listed in the original paper as accurately as possible without claiming completeness or a perfect matching.
