Discussion paper

DP4036 Responsive Pricing

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.


Courty, P and M Pagliero (2003), ‘DP4036 Responsive Pricing‘, CEPR Discussion Paper No. 4036. CEPR Press, Paris & London. https://cepr.org/publications/dp4036