DP4036 Responsive Pricing
|Author(s):||Pascal Courty, Mario Pagliero|
|Publication Date:||August 2003|
|Keyword(s):||dynamic pricing, L97, real time pricing, responsive pricing|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=4036|
We study the efficiency property of responsive pricing - a scheme first proposed by Vickrey - that increases prices as a function of capacity utilization. We show that although responsive pricing implements allocations that are arbitrarily close to market clearing, these allocations are not always efficient. We identify conditions under which efficiency occurs and discuss implications for the use of responsive pricing.