Competitive Multi-period Pricing with Fixed Inventories

Abstract

This paper studies the problem of multi-period pricing for perishable products in a competitive (oligopolistic) market. We study non cooperative Nash equilibrium policies for sellers. At the beginning of the time horizon, the total inventories are given and additional production is not an available option. The analysis for periodic production-review models, where production decisions can be made at the end of each period at some production cost after incurring holding or backorder costs, does not extend to this model. Using results from game theory and variational inequalities we study the existence and uniqueness of equilibrium policies. We also study convergence results for an algorithm that computes the equilibrium policies. The model in this paper can be used in a number of application areas including the airline, service and retail industries. We illustrate our results through some numerical examples.