Pricing strategy versus heterogeneous shopping behavior under market price dispersion
type: Item
instance of: scholarly article
title: Pricing strategy versus heterogeneous shopping behavior under market price dispersion
zbMATH Open document ID: 1470.91114
DOI: 10.1155/2016/3254240
author: José-Manuel Rey
author: Raúl G. Sanchis
author: Francisco Alvarez
published in: Abstract and Applied Analysis
publication date: 2018-08-30T00:00:00Z
review text: Summary: We consider the ubiquitous problem of a seller competing in a market of a product with dispersed prices and having limited information about both his competitors' prices and the shopping behavior of his potential customers. Given the distribution of market prices, the distribution of consumers' shopping behavior, and the seller's cost as inputs, we find the computational solution for the pricing strategy that maximizes his expected profits. We analyze the seller's solution with respect to different exogenous perturbations of parametric and functional inputs. For that purpose, we produce synthetic price data using the family of Generalized Error Distributions that includes normal and quasiuniform distributions as particular cases, and we also generate consumers' shopping data from different behavioral assumptions. Our analysis shows that, beyond price mean and dispersion, the shape of the price distribution plays a significant role in the seller's pricing solution. We focus on the seller's response to an increasing diversity in consumers' shopping behavior. We show that increasing heterogeneity in the shopping distribution typically lowers seller's prices and expected profits.
Mathematics Subject Classification ID: 91B24
zbMATH DE Number: 6929360
describes a project that uses: R
MaRDI profile type: Publication
full work available at URL: https://doi.org/10.1155/2016/3254240
OpenAlex ID: W2567291569
Wikidata QID: Q59121522
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cites work: Statistical Distributions
cites work: Q3997311
description: scientific article; zbMATH DE number 6929360