Dynamic and Differential Pricing Strategies for Revenue Management Problems

In many industries, managers face the problem of selling a given stock of assets by a deadline. The problem of dynamically and differentially pricing such assets is investigated when demand is price sensitive and stochastic and the firm´s objective is to maximize expected revenue. Based on intensity control theory, the fluid model to the stochastic problem is formulated and the optimal pricing is derived. The impacts of dynamic and differential pricing on revenue are analyzed through an extensive numerical study.