Dynamic Pricing under Cost Reduction in the Presence of Myopic and Strategic Consumers

<p>Second-period pricing strategy with condition under cost reduction. Note. Area 1, <span class="nowrap"><svg height="11.5564pt" id="M98" style="vertical-align:-2.26807pt" version="1.1" viewbox="-0.0498162 -9.28833 75.4168 11.5564" width="75.4168pt" xmlns="http://www.w3.org/2000/svg"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M475 507C475 612 440 712 326 712C139 712 23 420 23 215C23 96 58 -12 180 -12C369 -12 475 293 475 507ZM391 522C391 486 387 448 379 394H126C155 538 222 677 310 677C386 677 391 571 391 522ZM373 346C344 193 283 22 189 22C126 22 106 114 106 196C106 243 111 293 118 346H373Z"></path></g><g transform="matrix(.013,0,0,-0.013,10.107,0)"><path d="M512 -3V55L134 254V256L512 456V514L75 281V230L512 -3Z"></path></g><g transform="matrix(.013,0,0,-0.013,21.37,0)"><path d="M412 140C382 77 369 73 315 73H129L270 222C362 320 402 379 402 466C402 571 322 635 234 635C177 635 130 609 99 576L42 495L64 475C90 514 133 568 201 568C274 568 318 519 318 435C318 349 255 267 193 193C144 135 87 78 32 23V0H405C417 45 427 89 440 131L412 140Z"></path></g><g transform="matrix(.013,0,0,-0.013,27.61,0)"><path d="M300 -147C201 -63 143 98 143 270S200 602 300 686L282 710C136 610 70 450 70 271V270C70 89 136 -72 282 -170L300 -147Z"></path></g><g transform="matrix(.013,0,0,-0.013,32.108,0)"><path d="M384 0V27C293 34 287 42 287 114V635C232 613 172 594 109 583V559L157 557C201 555 205 550 205 499V114C205 42 199 34 109 27V0H384Z"></path></g><g transform="matrix(.013,0,0,-0.013,41.253,0)"><path d="M535 230V280H52V230H535Z"></path></g><g transform="matrix(.013,0,0,-0.013,51.79,0)"><path d="M494 514C482 587 419 712 303 712C238 712 174 667 174 603C174 561 205 514 249 449C219 438 187 422 162 407C93 366 23 283 23 177C23 69 87 -12 190 -12C244 -12 288 5 328 33C406 87 444 170 444 249C444 329 404 391 331 475C265 550 222 605 222 627C222 647 238 657 267 657C355 657 421 585 484 499L494 514ZM359 234C359 143 319 30 219 30C172 30 114 75 114 178C114 275 163 343 195 378C212 397 241 415 269 425C305 382 359 313 359 234Z"></path></g><g transform="matrix(.013,0,0,-0.013,58.512,0)"><path d="M275 270C275 450 212 609 64 710L45 686C145 604 203 442 203 270S147 -63 45 -147L64 -170C213 -68 275 89 275 270Z"></path></g><g transform="matrix(.013,0,0,-0.013,63.01,0)"><path d="M368 703H309L44 -163H104L368 703Z"></path></g><g transform="matrix(.013,0,0,-0.013,68.371,0)"><path d="M494 514C482 587 419 712 303 712C238 712 174 667 174 603C174 561 205 514 249 449C219 438 187 422 162 407C93 366 23 283 23 177C23 69 87 -12 190 -12C244 -12 288 5 328 33C406 87 444 170 444 249C444 329 404 391 331 475C265 550 222 605 222 627C222 647 238 657 267 657C355 657 421 585 484 499L494 514ZM359 234C359 143 319 30 219 30C172 30 114 75 114 178C114 275 163 343 195 378C212 397 241 415 269 425C305 382 359 313 359 234Z"></path></g></svg>;</span> Area 2, <span class="nowrap"><svg height="11.5564pt" id="M99" style="vertical-align:-2.26807pt" version="1.1" viewbox="-0.0498162 -9.28833 75.4168 11.5564" width="75.4168pt" xmlns="http://www.w3.org/2000/svg"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M475 507C475 612 440 712 326 712C139 712 23 420 23 215C23 96 58 -12 180 -12C369 -12 475 293 475 507ZM391 522C391 486 387 448 379 394H126C155 538 222 677 310 677C386 677 391 571 391 522ZM373 346C344 193 283 22 189 22C126 22 106 114 106 196C106 243 111 293 118 346H373Z"></path></g><g transform="matrix(.013,0,0,-0.013,10.107,0)"><path d="M512 230V281L75 514V456L453 256V254L75 55V-3L512 230Z"></path></g><g transform="matrix(.013,0,0,-0.013,21.37,0)"><path d="M412 140C382 77 369 73 315 73H129L270 222C362 320 402 379 402 466C402 571 322 635 234 635C177 635 130 609 99 576L42 495L64 475C90 514 133 568 201 568C274 568 318 519 318 435C318 349 255 267 193 193C144 135 87 78 32 23V0H405C417 45 427 89 440 131L412 140Z"></path></g><g transform="matrix(.013,0,0,-0.013,27.61,0)"><path d="M300 -147C201 -63 143 98 143 270S200 602 300 686L282 710C136 610 70 450 70 271V270C70 89 136 -72 282 -170L300 -147Z"></path></g><g transform="matrix(.013,0,0,-0.013,32.108,0)"><path d="M384 0V27C293 34 287 42 287 114V635C232 613 172 594 109 583V559L157 557C201 555 205 550 205 499V114C205 42 199 34 109 27V0H384Z"></path></g><g transform="matrix(.013,0,0,-0.013,41.253,0)"><path d="M535 230V280H52V230H535Z"></path></g><g transform="matrix(.013,0,0,-0.013,51.79,0)"><path d="M494 514C482 587 419 712 303 712C238 712 174 667 174 603C174 561 205 514 249 449C219 438 187 422 162 407C93 366 23 283 23 177C23 69 87 -12 190 -12C244 -12 288 5 328 33C406 87 444 170 444 249C444 329 404 391 331 475C265 550 222 605 222 627C222 647 238 657 267 657C355 657 421 585 484 499L494 514ZM359 234C359 143 319 30 219 30C172 30 114 75 114 178C114 275 163 343 195 378C212 397 241 415 269 425C305 382 359 313 359 234Z"></path></g><g transform="matrix(.013,0,0,-0.013,58.512,0)"><path d="M275 270C275 450 212 609 64 710L45 686C145 604 203 442 203 270S147 -63 45 -147L64 -170C213 -68 275 89 275 270Z"></path></g><g transform="matrix(.013,0,0,-0.013,63.01,0)"><path d="M368 703H309L44 -163H104L368 703Z"></path></g><g transform="matrix(.013,0,0,-0.013,68.371,0)"><path d="M494 514C482 587 419 712 303 712C238 712 174 667 174 603C174 561 205 514 249 449C219 438 187 422 162 407C93 366 23 283 23 177C23 69 87 -12 190 -12C244 -12 288 5 328 33C406 87 444 170 444 249C444 329 404 391 331 475C265 550 222 605 222 627C222 647 238 657 267 657C355 657 421 585 484 499L494 514ZM359 234C359 143 319 30 219 30C172 30 114 75 114 178C114 275 163 343 195 378C212 397 241 415 269 425C305 382 359 313 359 234Z"></path></g></svg>.</span></p>

Discrete Dynamics in Nature and Society

fig2

Figure 2

Figure 2: Dynamic Pricing under Cost Reduction in the Presence of Myopic and Strategic Consumers 