Responsive Pricing
29 Pages Posted: 22 Oct 2003
Date Written: August 2003
Abstract
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.
Keywords: L97, responsive pricing, real time pricing, dynamic pricing
JEL Classification: D45
Suggested Citation: Suggested Citation
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