Dynamic revenue maximization with heterogeneous objects: a mechanism design approach
Dynamic revenue maximization with heterogeneous objects: a mechanism design approach
We study the revenue-maximizing allocation of several heterogeneous, commonly ranked objects to impatient agents with privately known characteristics who arrive sequentially. There is a deadline after which no more objects can be allocated. We first characterize implementable allocation schemes, and compute the expected revenue for any implementable, deterministic and Markovian allocation policy. The revenue-maximizing policy is obtained by a variational argument which sheds more light on its properties than the usual dynamic programming approach. Finally, we use our main result in order to derive the optimal inventory choice, and explain empirical regularities about pricing in clearance sales. (JEL C61, D21, D82)
168-198
Gershkov, Alex
214a0b5e-c742-486d-b910-c8ec702c943a
Moldovanu, Benny
f84fdd42-3143-4219-be24-fb26385b106d
Gershkov, Alex
214a0b5e-c742-486d-b910-c8ec702c943a
Moldovanu, Benny
f84fdd42-3143-4219-be24-fb26385b106d
Gershkov, Alex and Moldovanu, Benny
(2009)
Dynamic revenue maximization with heterogeneous objects: a mechanism design approach.
American Economic Journal: Microeconomics, 1 (2), .
(doi:10.1257/mic.1.2.168).
Abstract
We study the revenue-maximizing allocation of several heterogeneous, commonly ranked objects to impatient agents with privately known characteristics who arrive sequentially. There is a deadline after which no more objects can be allocated. We first characterize implementable allocation schemes, and compute the expected revenue for any implementable, deterministic and Markovian allocation policy. The revenue-maximizing policy is obtained by a variational argument which sheds more light on its properties than the usual dynamic programming approach. Finally, we use our main result in order to derive the optimal inventory choice, and explain empirical regularities about pricing in clearance sales. (JEL C61, D21, D82)
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e-pub ahead of print date: 2 August 2009
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Local EPrints ID: 503664
URI: http://eprints.soton.ac.uk/id/eprint/503664
ISSN: 1945-7669
PURE UUID: e4f88b9f-1f88-4118-8c37-b44414b4ed5e
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Date deposited: 08 Aug 2025 16:36
Last modified: 09 Aug 2025 02:19
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Author:
Alex Gershkov
Author:
Benny Moldovanu
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