Robust Pricing with Limited Demand Information

Authors:
Preprint
Publisher website
Google Scholar
Abstract
We study monopoly pricing under limited demand information with a competitive-ratio objective, defined as the minimum ratio of realized profit to ex post optimal profit across all admissible demand curves. We characterize the unique price that maximizes the competitive ratio and identify representative inverse demand curves that attain this ratio. Moreover, we argue that the competitive-ratio criterion can be more attractive than the worst-case-profit criterion from a realized-profit perspective. The model also provides a tractable framework for analyzing pricing with arbitrary patterns of observed demand data and with an uncertain choke price.

This publication has 20 references indexed in Scilit: