Capabilities, Competition and Innovation Seminars
A Dynamic Theory of Random Price Discounts
Daniel Garrett (University of Essex)
Thursday 06 February 2025 13:45 - 15:00
MAR 6.33, 6th floor, The Marshall Building, 44 Lincoln's Inn Fields, London WC2A 3LY
About this event
A seller with commitment power sets prices over time. Risk-averse buyers arrive to the market and decide when to purchase. We show that it is optimal for the seller to choose a constant high price punctuated by occasional episodes of sequential discounts that occur at random times. This optimal price path has the property that the price a buyer ends up paying is independent of his arrival and purchase times, and only depends on his valuation. Our theory accommodates empirical findings on the timing of discounts.
Participants are expected to adhere to the CEP Events Code of Conduct.
Directions
This event will take place in MAR 6.33, 6th floor, The Marshall Building, 44 Lincoln's Inn Fields, London WC2A 3LY.
The building is labelled MAR on the LSE campus map. You can also find us on Google Maps. For further information, go to contact us.This series is part of the CEP's Growth programme.