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Economic Theory

, Volume 34, Issue 2, pp 235–259 | Cite as

Responsive pricing

  • Pascal Courty
  • Mario Pagliero
Research Article

Abstract

We study the efficiency property of responsive pricing, a scheme that proposes to increase prices as a function of the level of capacity utilization in environments where traditional allocation schemes (e.g. competitive markets, non-linear pricing) cannot be implemented in practice. We show that although responsive pricing implements allocations that are arbitrarily close to full capacity utilization (no wasted capacity and no excess demand), these allocations are not always efficient. We identify conditions under which efficiency occurs and discuss implications for the use of responsive pricing.

Keywords

Responsive pricing Congestion pricing 

JEL Classification Numbers

D60 L50 R48 

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Copyright information

© Springer-Verlag 2007

Authors and Affiliations

  1. 1.Department of EconomicsEuropean University InstituteFirenzeItaly
  2. 2.Department of Economics and Finance and Collegio Carlo AlbertoUniversity of TurinTurinItaly

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