@inproceedings{SchlosserBoissier2017,
  author    = {Schlosser, Rainer and Boissier, Martin},
  title     = {Optimal price reaction strategies in the presence of active and passive competitors},
  series = {Proceedings of the 6th International Conference on Operations Research and Enterprise Systems - ICORES},
  booktitle = {Proceedings of the 6th International Conference on Operations Research and Enterprise Systems - ICORES},
  editor    = {Liberatore, Federico and Parlier, Greg H. and Demange, Marc},
  publisher = {SCITEPRESS - Science and Technology Publications, Lda.},
  address   = {Set{\´u}bal},
  isbn      = {978-989-758-218-9},
  doi       = {10.5220/0006118200470056},
  pages     = {47 -- 56},
  year      = {2017},
  abstract  = {Many markets are characterized by pricing competition. Typically, competitors are involved that adjust their prices in response to other competitors with different frequencies. We analyze stochastic dynamic pricing models under competition for the sale of durable goods. Given a competitor's pricing strategy, we show how to derive optimal response strategies that take the anticipated competitor's price adjustments into account. We study resulting price cycles and the associated expected long-term profits. We show that reaction frequencies have a major impact on a strategy's performance. In order not to act predictable our model also allows to include randomized reaction times. Additionally, we study to which extent optimal response strategies of active competitors are affected by additional passive competitors that use constant prices. It turns out that optimized feedback strategies effectively avoid a decline in price. They help to gain profits, especially, when aggressive competitor s are involved.},
  language  = {en}
}