How to Price: A Guide to Pricing Techniques and Yield Management
By Oz Shy
Cambridge University Press, 2008.
ISBN-13: 9780521715645 (paperback); 9780521887595 (hardcover).

Table of Contents

Preface xi

1. Introduction to Pricing Techniques 1

    1.1 Services and Advance Reservation Systems 2
    1.2 Overview of Pricing Techniques 5
    1.3 Revenue Management versus Profit Maximization 9
    1.4 The Role Played by Capacity 10
    1.5 YM, Consumer Welfare, and Antitrust 12
    1.6 Pricing Techniques and the Use of Computers 13
    1.7 The Literature and Presentation Methods 14
    1.8 Notation and Symbols 14

2. Demand and Cost 19

    2.1 Demand Theory and Interpretations 20
    2.2 Discrete Demand Functions 24
    2.3 Linear Demand Functions 26
    2.4 Constant-elasticity Demand Functions 30
    2.5 Aggregating Demand Functions 34
    2.6 Demand and Network Effects 39
    2.7 Demand for Substitutes and Complements 42
    2.8 Consumer Surplus 45
    2.9 Cost of Production 52
    2.10 Exercises 56

3. Basic Pricing Techniques 59

    3.1 Single-market Pricing 60
    3.2 Multiple Markets without Price Discrimination 67
    3.3 Multiple Markets with Price Discrimination 79
    3.4 Pricing under Competition 89
    3.5 Commonly Practiced Pricing Methods 99
    3.6 Regulated Public Utility 104
    3.7 Exercises 110

4 Bundling and Tying 115

    4.1 Bundling 117
    4.2 Tying 131
    4.3 Exercises 145

5. Multipart Tariff 151

    5.1 Two-part Tariff with One Type of Consumer 152
    5.2 Two-part Tariff with Multiple Consumer Types 159
    5.3 Menu of Two-part Tariffs 165
    5.4 Multipart Tariff 171
    5.5 Regulated Public Utility 176
    5.6 Exercises 178

6. Peak-load Pricing 181

    6.1 Seasons, Cycles, and Service-cost Definitions 183
    6.2 Two Seasons: Fixed-peak Case 185
    6.3 Two Seasons: Shifting-peak Case 190
    6.4 General Computer Algorithm for Two Seasons 194
    6.5 Multi-season Pricing 194
    6.6 Season-interdependent Demand Functions 201
    6.7 Regulated Public Utility 205
    6.8 Demand, Cost, and the Lengths of Seasons 214
    6.9 Exercises 223

7. Advance Booking 227

    7.1 Two Booking Periods with Two Service Classes 232
    7.2 Multiple Periods with Two Service Classes 238
    7.3 Multiple Booking Periods and Service Classes 245
    7.4 Dynamic Booking with Marginal Operating Cost 248
    7.5 Network-based Dynamic Advance Booking 250
    7.6 Fixed Class Allocations 254
    7.7 Nested Class Allocations 258
    7.8 Exercises 262

8. Refund Strategies 265

    8.1 Basic Definitions 267
    8.2 Consumers, Preferences, and Seller’s Profit 270
    8.3 Refund Policy under an Exogenously Given Price 274
    8.4 Simultaneous Price and Refund Policy Decisions 280
    8.5 Multiple Price and Refund Packages 288
    8.6 Refund Policy under Moral Hazard 290
    8.7 Integrating Refunds within Advance Booking 293
    8.8 Exercises 294

9. Overbooking 297
    9.1 Basic Definitions 299
    9.2 Profit-maximizing Overbooking 305
    9.3 Overbooking of Groups 313
    9.4 Exercises 322

10. Quality, Loyalty, Auctions, and Advertising 325

    10.1 Quality Differentiation and Classes 326
    10.2 Damaged Goods 332
    10.3 More on Pricing under Competition 335
    10.4 Auctions 343
    10.5 Advertising Expenditure 352
    10.6 Exercises 355

11. Tariff-choice Biases and Warranties 359

    11.1 Flat-rate Biases 360
    11.2 Choice in Context and Extremeness Aversion 362
    11.3 Other Consumer Choice Biases 366
    11.4 Warranties 369
    11.5 Exercises 375

12. Instructor and Solution Manual 377

    12.1  To the Reader 377
    12.2  Manual for Chapter 2: Demand and Cost 378
    12.3  Manual for Chapter 3: Basic Pricing Techniques 382
    12.4  Manual for Chapter 4: Bundling and Tying 387
    12.5  Manual for Chapter 5: Multipart Tariff 391
    12.6  Manual for Chapter 6: Peak-load Pricing 395
    12.7  Manual for Chapter 7: Advance Booking 402
    12.8  Manual for Chapter 8: Refund Strategies 406
    12.9  Manual for Chapter 9: Overbooking 411
    12.10 Manual for Chapter 10: Quality, Loyalty, Auctions, and Advertising 414
    12.11 Manual for Chapter 11: Tariff-choice Biases and Warranties 417

References 421, Index 431

[End of TOC: How to Price, by Oz Shy]