Tight bounds on the relative performances of pricing mechanisms in storable good markets

Abstract

In the storable good monopoly problem, a monopolist sells a storable good by announcing a price in each time period. Each consumer has a unitary demand per time period with an arbitrary valuation. In each period, consumers may buy none, one, or more than one good (in which case the extra goods are stored for future consumption incurring a linear storage cost). We compare the performance of two important pricing mechanisms on the profitability of the monopolist: pre-announced pricing mechanisms and price contingent mechanisms. In pre-announced pricing the prices in each time period are stated in advance; in a price contingent mechanism each price is stated at the start of the time period, and..