Document Type
Article
Publication Date
5-2010
Publication Source
Journal of Revenue & Pricing Management
Abstract
We propose a capacity driven pricing mechanism for several service industries in which the customer behavior, the price demand relationship, and the competition are significantly distinct from other industries. According our observation, we found that the price demand relationship in these industries cannot be modeled by fitted curves; the customers would neither plan in advance nor purchase the service strategically; and the competition would be largely local. We analyze both risk neutral and risk aversion pricing models and conclude the proposed capacity driven model would be the optimal solution under mild assumptions. The resulting pricing mechanism has been implemented at our industrial partner with positive results since 2005.
Inclusive pages
260-275
ISBN/ISSN
1476-6930
Document Version
Postprint
Copyright
Copyright © 2009, Palgrave Macmillan.
Publisher
Palgrave-Macmillan
Volume
9
Issue
3
Place of Publication
United Kingdom
Peer Reviewed
yes
eCommons Citation
Chen, Lijian and Alexander, Suraj M., "Capacity-Driven Pricing Mechanism in Special Service Industries" (2010). MIS/OM/DS Faculty Publications. 6.
https://ecommons.udayton.edu/mis_fac_pub/6
Included in
Business Administration, Management, and Operations Commons, Databases and Information Systems Commons, Management Information Systems Commons, Management Sciences and Quantitative Methods Commons, Operations and Supply Chain Management Commons, Other Computer Sciences Commons
Comments
The document available for download is the authors' accepted manuscript, a post-peer-review, pre-copyedited version of an article published in the Journal of Revenue & Pricing Management. The definitive publisher-authenticated version is available online.
Permission documentation is on file.