The effect of discounts on optimal pricing under limited capacity

This paper considers the problem of optimal pricing in a system serving two classes of customers differentiated by their delay sensitivities. We derive the revenue maximising pricing policies whether or not price discrimination is an option. We find that in both cases the optimal policy causes the less delaysensitive class to enter first, and the optimal prices are increasing in capacity under price discrimination, which is not generally true when price discrimination is not allowed. Furthermore, under price discrimination, less capacity is needed to capture a customer class or the entire market, while, more customers are served and higher revenue is generated. Finally, we use an M/M/1 system to provide further insights and numerical analysis. © 2011 Inderscience Enterprises Ltd

Priority option pricing in an M/M/m queue

We study a system where the service provider offers priority options. We identify the optimal option pricing policy, by deriving the optimal number a customer would buy and the customer's exercise policy as a function of system congestion, options remaining, time to expiration and possibility of balking

Pricing and capacity allocation under asymmetric information using Paris Metro Pricing

We consider a Paris Metro Pricing (PMP) approach for providing service to two classes of customers differentiated by their delay sensitivity. We develop a leader-follower game, where the leader is the service provider who sets the price and the customers respond by deciding whether to join or balk. We derive the customer behaviour as the Nash equilibrium of a multi-person game and obtain the revenue maximising price pairs for all combinations of arrival rates from each class to each server. We finally derive the capacity threshold in such domain and its impact on customer accessibility to the product or service. Copyright © 2009, Inderscience Publishers