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Competitive Pricing in a Multi-Product Multi-Attribute Environment

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Abstract

We address the problem of simultaneous pricing of a line of several products, both complementary products and substitutes, with a number of distinct price differentiation classes for each product (e.g., volume discounts, different distribution channels, and customer segments) in both monopolistic and oligopolistic settings. We provide a generic framework to tackle this problem, consider several families of demand models, and focus on a real-world case-study example. We propose an iterative relaxation algorithm, and state sufficient conditions for convergence of the algorithm. Using historical sales and price data from a retailer, we apply our solution algorithm to suggest optimal pricing, and report on numerical results.

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