Dynamic Pricing With The Present Of Speculators And Strategic Consumers

As the world economic downturn, lots of people want to use less money to buy better quality products. Meanwhile, the rapid development of the Internet allows consumers quickly and easily get product information. So consumers have become increasingly price sensitive, they will concern about retail prices for products, and expect the future prices of the products to choose the buying time. More and more consumers begin to produce strategies behavior, and they will not buy until the product price reduces. At the same time, with the increasingly fierce competition of the market, the acceptance of new products and new things of consumer gradually improve, product life cycles are showing increasingly short, and many products will be affected by production and inventory constraints within a short time. Sometimes, these short-term and inventory limited productions are very popular with consumers. So it appears to speculative opportunities. Speculators make profit by buying low and selling high products in the market.When they expect the market demand is greater than the supply, they will buy low and sell high to reap the benefits. When the strategic consumers and speculators appear, the retailer’s past pricing strategy often fails to adapt to the changing environment, so that the retailer can not obtains the maximum benefit. Therefore, to enhance their income level, it is worth well to take speculators and strategic consumers into account the products pricing.In this thesis, on the base of reading large number of domestic and foreign literatures, we define two sale periods, including period1and period2. The consumer also divides into fixed and random consumers. The fixed consumer, made up of myopia consumers and strategic consumers, is appeared in period1. But the random consumer appears only in period2. In addition, the retailer, subjects to production and inventory, cannot increase the supply of product during the sale period. This thesis uses backward induction procedure to discuss the relationship and decision-making behavior among the retailer, speculators and strategic consumers. The retailer makes a two-period pricing decision with the goal to maximize the expect revenue; speculators make a two-period trading decision with the goal to maximize speculation revenue; consumers make a two-period purchase decision with the goal to maximize total utility. In this thesis, on the base of analyze of dynamic pricing when the retailer faces strategic consumers, then add speculators behavior factor, and studies the impacts of the retailer pricing strategies and strategic consumers behavior. Finally, through the introduction of revenue-sharing factor, the thesis considers the change of the retailer’s revenue, while think about the cooperation of the retailer and speculators. Through comparison of revenue in case of non-cooperation with the retailer and speculators, came to the range of revenue-sharing factor.