The Internet as an enabler for dynamic pricing of goods

The Internet offers the potential for dynamic pricing for a wide range of products across the supply chain. Dynamic pricing can be formally defined as the buying and selling of goods in markets where prices move quickly in response to supply and demand fluctuations. Unlike physical markets where change occurs slowly because of information delays, change occurs very rapidly on the Internet. In the marketplace, the Internet is a powerful tool for almost instantaneous consumer feedback. For example, prices can be changed dynamically to meet demand because the cost of changing a price may be lower on the Internet than in physical markets. The success of dynamic pricing is helping in the growth of new businesses, including broad-based e-commerce portals new interactive networks. This paper has several objectives. The first objective is to look at factors that affected the use of dynamic pricing in the past. The second objective is to summarize the notion of dynamic pricing over the Internet. The third objective is to examine the different methods for collecting dynamic demand data over the Internet. The final objective is to present two models to optimize the revenue obtained for build-to-forecast and build-to-order environments.

[1]  Youngme Moon,et al.  Pricing and Market Making on the Internet , 1999 .

[2]  P.K. Kannan, Praveen K. Kopalle Dynamic Pricing on the Internet: Importance and Implications for Consumer Behavior , 2001 .

[3]  O. Williamson Transaction-Cost Economics: The Governance of Contractual Relations , 1979, The Journal of Law and Economics.

[4]  Samuel E. Bodily,et al.  A Taxonomy and Research Overview of Perishable-Asset Revenue Management: Yield Management, Overbooking, and Pricing , 1992, Oper. Res..

[5]  S. Kimes Yield management: A tool for capacity-considered service firms , 1989 .

[6]  Richard Engelbrecht-Wiggans,et al.  Multi-Unit Pay-Your-Bid Auctions with Variable Awards , 1998 .

[7]  B. McCarl,et al.  Economics , 1870, The Indian medical gazette.

[8]  Stéphane Robin,et al.  The effect of transaction costs on double auction markets , 1998 .

[9]  Dennis W. Carlton Uncertainty, Production Lags, and Pricing , 1977 .

[10]  Lisa N. Takeyama,et al.  Buy prices in online auctions: irrationality on the internet? , 2001 .

[11]  P. K. Kannan,et al.  Dynamic Pricing on the Internet: Importance and Implications for Consumer Behavior , 2001, Int. J. Electron. Commer..

[12]  R. Engelbrecht-Wiggans,et al.  Multi-unit auctions with uniform prices , 1998 .

[13]  Youngme Moon,et al.  Article not available electronically , 2000 .

[14]  Fred M. Feinberg,et al.  Do we care what others Get? A Behaviorist Approach to Targeted Promotions , 2002 .

[15]  Refractor Uncertainty , 2001, The Lancet.

[16]  Andrew B. Whinston,et al.  Radically New Product Introduction Using On-line Auctions , 2001, Int. J. Electron. Commer..

[17]  G. Ryzin,et al.  Optimal dynamic pricing of inventories with stochastic demand over finite horizons , 1994 .

[18]  Gabriel R. Bitran,et al.  An Application of Yield Management to the Hotel Industry Considering Multiple Day Stays , 1995, Oper. Res..

[19]  Aaas News,et al.  Book Reviews , 1893, Buffalo Medical and Surgical Journal.

[20]  K. KannanP.,et al.  Dynamic Pricing on the Internet , 2001 .