Selecting and Pricing a Product Line Using Estimated Reservation Prices

摘要

In this paper we consider the problem of selecting and pricing products in a product line using estimated reservation prices. We use a consumer choice model in which individuals have an unknown reservation price for each product, which must be estimated, and act to maximize their consumer surplus. The retailer must select a subset of products from a set of potential product offerings. The goal is to determine how many and which products to sell, as well as how to price each product, in order to maximize profits.