Dynamic allocation and pricing problems appear in numerous frameworks such as the retail of seasonal/style goods, the allocation of fixed capacities in the travel and leisure industries (e.g., airlines, hotels, rental cars, holiday resorts), the allocation of a fixed inventory of equipment in a given period of time (e.g. equipment for medical procedures, bandwidth or advertising space in online applications), and the assignment of personnel to incoming tasks. Although dynamic pricing is a very old, modern Revenue Management (RM) techniques started with US Airline Deregulation Act of 1978. The ... More

Dynamic allocation and pricing problems appear in numerous frameworks such as the retail of seasonal/style goods, the allocation of fixed capacities in the travel and leisure industries (e.g., airlines, hotels, rental cars, holiday resorts), the allocation of a fixed inventory of equipment in a given period of time (e.g. equipment for medical procedures, bandwidth or advertising space in online applications), and the assignment of personnel to incoming tasks. Although dynamic pricing is a very old, modern Revenue Management (RM) techniques started with US Airline Deregulation Act of 1978. The basic RM issues are: 1) Quantity decisions: How to allocate capacity/output to different segments, products or channels? When to withhold products from the market? 2) Structural decisions: Which selling format to choose (posted prices, negotiations, auctions, etc..)? Which features to use for a particular format (segmentation, volume discounts, bundling, etc..)? 3) Pricing decisions: How to set posted prices, reserve prices? How to price differentiate? How to price over time? How to markdown over life time? Broadly speaking, all above questions deal in fact with issues treated in the Auction/Mechanism Design. Nevertheless, mechanism design has not been the tool of choice in RM: instead, most papers have focused on analyzing properties of restricted classes of allocation/pricing schemes. Recently, this challenge has been addressed by a more or less systematic body of work appearing under the heading of Dynamic Mechanism Design. This book illustrates some results of this strand of research, as reflected in the authors’ recent work.