Naming your own price mechanisms: Revenue gain or drain?

Shapiro, Dmitry; Zillante, Arthur

doi:10.1016/j.jebo.2009.07.012

Cited by 29 publications

(12 citation statements)

References 19 publications

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“…Fay and Xie (2008) study "probabilistic selling" when a monopolist creates a probabilistic good by clubbing several distinct goods together, and Fay and Xie (2010) further compare probabilistic selling with advance selling. While in general the literature supports the use of an opaque NYOP retailer, Shapiro and Zillante (2009) find that NYOP mechanisms that do not conceal information about products increase profit and consumer surplus. These papers do not examine the efficacy of using an opaque intermediary from the perspective of service providers, which is the focus of our paper.…”

Section: Literature Reviewmentioning

confidence: 88%

Opaque Distribution Channels for Competing Service Providers: Posted Price vs. Name-Your-Own-Price Mechanisms

Chen

Gal‐Or

Roma

2014

Operations Research

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We consider a two stage model to study the impact of different selling mechanisms of an opaque reseller on competing travel service providers, who face both leisure and business customers. While leisure travelers learn of their need to travel in the first stage, business travelers learn of this need in the second stage. Business travelers have a higher willingness to pay than leisure travelers, but their demand is stochastic. With this pattern of demand, providers find it optimal to reserve capacity for sale in the second stage, after selling to some leisure travelers in the first stage. After the business demand realizes, providers can clear the remaining capacity, if any, through the opaque intermediaries in the second stage. We find that with a single reseller, competing service providers prefer that this reseller uses the posted price instead of the Name-Your-Own-Price mechanism. In addition, despite the potential benefit of using an opaque reseller to price discriminate between business and leisure customers, providers may prefer direct selling to customers without any intermediary in the second stage. We also examine the environment with multiple opaque resellers, and show that for competing service providers profits are the highest when selling via a single posted price reseller.

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Section: Literature Reviewmentioning

confidence: 88%

Opaque Distribution Channels for Competing Service Providers: Posted Price vs. Name-Your-Own-Price Mechanisms

Chen

Gal‐Or

Roma

2014

Operations Research

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“…Shapiro's (2011) general analysis of a model that incorporates buyers' risk attitude (i.e., the impact of uncertainty on buyers) shows NYOP is often more profitable than posted price. Shapiro and Zillante's (2009) experimental study on NYOP produced similarly positive conclusions. Wang, Gal-Or, and Chatterjee (2009) obtained separate analytical evidence on how NYOP could improve profitability via its impact on inventory management in a channel setting in the travel industry.…”

Section: Name Your Own Pricementioning

confidence: 61%

Beyond Posted Prices: the Past, Present, and Future of Participative Pricing Mechanisms

Spann

Zeithammer

Bertini³

et al. 2017

Cust. Need. and Solut.

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Driven by the low transaction costs and interactive nature of the internet, customer participation in the price-setting process has increased. These changes were first brought about by the rise of online auctions in the early 2000s, followed by the emergence of newer participative mechanisms.Today, platforms such as eBay have popularized online auctions on a global scale, Priceline has made headlines with its name-your-own-price (NYOP) business model, and Humble Bundle has enabled independent musicians and game developers to market their works through pay-what-youwant (PWYW) pricing. Advertising exchanges conduct several hundred million individual auctions per day to sell online advertising slots. These are just a few examples of participative pricing in transactions among consumers or businesses. In parallel, academic research on participative pricing has blossomed in recent years, with an overarching concern over the profitability and other marketing implications these mechanisms have on sellers and buyers.The present paper contributes to this literature in three ways. First, we propose a definition of participative pricing mechanisms, as well as a useful taxonomy. Second, we discuss the current understanding by synthesizing conceptual and empirical academic literature. Third, we outline promising research questions with a key focus on the related behavioral aspects of buyers and sellers.3

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“…He shows that drop bidding may be optimal if the consumer is sufficiently impatient and the expected probability of change is at a moderate level. [14] experimentally study the profitability of the NYOP mechanism, compared with the posted-price mechanism. They show that whether NYOP can improve profit is contingent on information symmetry.…”

Section: Literature Reviewmentioning

confidence: 99%

The performance of pay-as-you-wish pricing with relational and forward-looking customers

Chen

Liang

2014

2014 11th International Conference on Service Systems and Service Management (ICSSSM)

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This paper examines the economic payoffs to sellers and buyers from the pay-as-you-wish (PAYW) pricing strategy, which allows buyers to choose the amount of payment at will. We argue that under PAYW, self-interested buyers choose a positive amount of payment as a support for the business model. We show that PAYW can also help sellers to improve their profits because of the approximation of PAYW to the first-degree price discrimination. Using a stylized model, we compare the performance of PAYW with that of the fixed-price pricing strategy. We also provide an explanation to the payment dispersion under PAYW from the behavioral perspective and an analysis of the role of the marginal cost.

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Naming your own price mechanisms: Revenue gain or drain?

Cited by 29 publications

References 19 publications

Opaque Distribution Channels for Competing Service Providers: Posted Price vs. Name-Your-Own-Price Mechanisms

Opaque Distribution Channels for Competing Service Providers: Posted Price vs. Name-Your-Own-Price Mechanisms

Beyond Posted Prices: the Past, Present, and Future of Participative Pricing Mechanisms

The performance of pay-as-you-wish pricing with relational and forward-looking customers

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