Revenue Management with Bargaining

Revenue Management with Bargaining

0.00 Avg rating0 Votes
Article ID: iaor20115744
Volume: 59
Issue: 2
Start Page Number: 498
End Page Number: 506
Publication Date: Mar 2011
Journal: Operations Research
Authors: ,
Keywords: programming: markov decision, yield management
Abstract:

Static game‐theoretic models of bilateral bargaining assume that the seller knows his valuation for the item that is up for sale; that is, how the seller may determine this quantity is exogenous to these models. In this paper, we develop and analyze a stylized Markov decision process that endogenizes the seller's computation of his marginal inventory valuation in an infinite‐horizon revenue management setting when each sale occurs according to a given bilateral bargaining mechanism. We use this model to compare, both analytically and numerically, the seller's performance under four basic bilateral bargaining mechanisms with a tractable information structure. These comparisons provide insights into the seller's performance under the following trading arrangements: buyer and seller posted pricing, negotiated pricing, and rule‐based pricing.

Reviews

Required fields are marked *. Your email address will not be published.