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Meeting ID: 977 1968 6596    Passcode: 627362

Title: Three Models for Pricing Decisions in Services or under Inventory Considerations

 Abstract: This dissertation studies pricing decisions under three different service settings. First, we consider a service system in which customers of two different types share the same service environment and their services are influenced by the presence of others. Specifically, when receiving services, customers interact with each other, and the effect of this interaction on the customers’ utility may be positive or negative. Using a game-theoretic model, we show that in any Nash equilibrium, competing service providers will never benefit from price discrimination unless the externalities are negative and strong. With a numerical study, we find that when the two providers have small capacities, price discrimination will improve profits. However, when the two facilities have ample capacities, price discrimination might even hurt profits because of increased competition. The second setup is for a service system where competing service providers need to first perform an inspection to provide a quote to interested customers. We develop a game-theoretic model and fully characterize the equilibrium. With a numerical analysis, we find that, in equilibrium, firms might make profits mainly through the fees charged at the inspection stage. For the third setting, we consider the classical revenue management problem under inventory considerations with the additional feature that the firm has the option to bundle the product in clearance with a stable item. We prove that the optimal dynamic pricing strategy is of threshold-type, that is, it is optimal to offer a discount on the bundle when the value of an additional product is between two thresholds.

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