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Oligopoly Dynamic Pricing: A Repeated Game with Incomplete Information

Citation Author(s):
Qing Zhao
Submitted by:
Yixuan Zhai
Last updated:
19 March 2016 - 9:33pm
Document Type:
Poster
Document Year:
2016
Event:
Presenters:
Yixuan Zhai
 

We consider an oligopoly dynamic pricing problem where the demand model is unknown and the sellers have different marginal costs. We formulate the problem as a repeated game with incomplete information. We develop a dynamic pricing strategy that leads to a Pareto-efficient and subgame-perfect equilibrium and offers a bounded regret over an infinite horizon, where regret is defined as the expected cumulative profit loss as compared to the ideal scenario with a known demand model. The resulting equilibrium also reveals a spontaneous collusion among a subset of sellers due to the difference in marginal costs among the sellers.

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