We consider a decentralized two-period supply chain in which a manufacturer produces a product and sells it through a retailer facing a price-dependent demand. We assume that the second period production cost declines linearly in the first-period production, but with a random learning rate. As...

Optimal control theory is employed to derive explicitly the optimal (profit maximizing) price of a durable new product over time. The sales rate dynamics depends on the product price and on the unsold portion of the market. Specifically, the hazard rate (i.e. the probability of a purchase by a...

A model of new-product adoption is proposed that incorporates price and advertising effects. An optimal control problem that uses the model as its dynamics is solved explicitly to obtain the optimal price and advertising effort over time. The model has a great potential to be used in obtaining...

This paper deals with optimal pricing of a personalized product such as a personal portrait or photo. A new model of the pricing structure inspired by two real-life cases is introduced to the literature and solved to obtain optimal photo sitting fees and the final product price. A sensitivity...

Cooperative advertising is an incentive offered by a manufacturer to influence retailers' promotional decisions. We study a dynamic durable goods duopoly with a manufacturer and two independent and competing retailers. The manufacturer as a Stackelberg leader announces his wholesale prices and...

Previous studies discuss the role of a government’s subsidy offered to consumers in reaching her green product adoption target. However, subsidies do not last forever and will terminate. Accounting for the subsidy termination and the interplay among subsidy, learning-by-doing and competition,...

We consider a market consisting of two populations, termed rich and poor for convenience. If a product is priced such that it is very expensive for the poor, but affordable to the rich, then it becomes a status symbol for the poor and this makes it more desirable for the poor. At a lower price,...