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| Author: | Wernerfelt, B. |
| Title: | Special case of dynamic pricing policy. |
| Journal: | Management Science
1986 : DEC, VOL. 32:12, p. 1562-1566 |
| Index terms: | PRICING LEARNING CURVES BRAND LOYALTY |
| Language: | eng |
| Abstract: | The implications of experience curves and brand loyalty are studied for optimal dynamic pricing policy. In a continuous time model several results from the literature on open loop equilibria are synthesized. It is shown that prices should decrease over time for high discount rates and steeper exogenous declines in variable costs. Controversially, the prices should increase over time if experience curves affect fixed costs and if consumers are brand loyal. |
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