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An Oligopoly Model for Studying Equilibrum Strategy of Seasonal Goods Dynamic Pricing in Competitive Market with Demand Uncertainty

Fadavi, Niloofar | 2018

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 51942 (01)
  4. University: Sharif University of Technology
  5. Department: Industrial Engineering
  6. Advisor(s): Kianfar, Farhad
  7. Abstract:
  8. This paper studies sub game perfect Nash equilibrium of a price competition in an oligopoly market with perishable assets. Sellers each has one unit of a good that cannot be replenished, and they compete in setting prices to sell their good over a finite sales horizon. Buyers each demand one unit of the good in each period and the number of buyers coming to the market in each period is random. All sellers’ prices are accessible for buyers, and search is costless. Using stochastic dynamic programming methods, the best response of sellers can be obtained from a one-shot price competition game regarding remained periods and the current-time demand structure. Assuming a binary demand model, we show that there is a unique Nash equilibrium in the duopoly model and also the oligopoly model does not exhibit price dispersion according to a specific measure. Considering a generalized demand model, we show that there is a unique mixed strategy Nash equilibrium in the duopoly model, and also there is a unique symmetric mixed strategy Nash equilibrium in the oligopoly model. Several testable theoretical implications on the distribution of market prices are derived
  9. Keywords:
  10. Nash Equilibrium Point ; Perishable Products ; Dynamic Pricing ; Strategic Sellers ; Option Value ; Uncertainty in Demand ; Competitive Market

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