Journal of Optimization Theory and Applications

, Volume 55, Issue 1, pp 119–131 | Cite as

Pricing problems with a continuum of customers as stochastic Stackelberg games

  • P. B. Luh
  • T. S. Chang
  • T. Ning
Contributed Papers

Abstract

The pricing problem where a company sells a certain kind of product to a continuum of customers is considered. It is formulated as a stochastic Stackelberg game with nonnested information structure. The inducible region concept, recently developed for deterministic Stackelberg games, is extended to treat the stochastic pricing problem. Necessary and sufficient conditions for a pricing scheme to be optimal are derived, and the pricing problem is solved by first delineating its inducible region, and then solving a constrained optimal control problem.

Key Words

Stackelberg games stochastic games pricing problems nonnested information multiperson optimization 

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Copyright information

© Plenum Publishing Corporation 1987

Authors and Affiliations

  • P. B. Luh
    • 1
  • T. S. Chang
    • 2
  • T. Ning
    • 3
  1. 1.Department of Electrical and Systems EngineeringUniversity of ConnecticutStorrs
  2. 2.Department of Electrical and Computer EngineeringUniversity of CaliforniaDavis
  3. 3.Department of Electrical and Computer EngineeringTrinity CollegeHartford

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