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31

Operations Seminar

Wednesday March 26, 2014

Time:

9:30AM - 10:45AM

 

Description

Bin Hu,
UNC

Notes

Dynamic Production Capacity Management with Price Skimming

We consider a monopolist manufacturer of a durable product who adopts price skimming. The manufacturer has no initial production capacity, and can build and salvage capacity at anytime. The production capacity limits the rate of price skimming, thus endogenizing the product's price trajectory. We show that the manufacturer should never salvage any capacity before exiting the market, and that at anytime, it should build the capacity up to a target level that is independent of the existing capacity. We also show that if the manufacturer only has incomplete information about the market, it would be better o with a slight underestimate of the market potential than an unbiased one.

Event URL

www.fuquaworld.duke.edu/www/fsc/poster.jsp?number=19141

Contact Name

Patricia Bryan

Contact Email

pat.bryan@duke.edu