American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
On Dynamic Pricing
American Economic Journal: Microeconomics
(pp. 174–207)
Abstract
This paper builds a theory of dynamic pricing for the sale of timed goods. The main friction is private and evolving valuation of the buyer prior to the date of consumption, which follows a Poisson process. A combination of membership fees and continuously increasing prices induces a threshold response from the buyer, endogenously segmenting the market along timing of purchase. This pricing mechanism achieves the deterministic global optimum. The tools developed here are shown to be useful in thinking about global incentives in dynamic mechanisms, and mapping dynamic pricing to the classic taxonomy of consumer-producer surplus and deadweight loss.Citation
Krasikov, Ilia, and Rohit Lamba. 2026. "On Dynamic Pricing." American Economic Journal: Microeconomics 18 (1): 174–207. DOI: 10.1257/mic.20220124Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D82 Asymmetric and Private Information; Mechanism Design
- D86 Economics of Contract: Theory