Optimal pricing model for adoption of new products influenced by peer effects

Wang, Yijin

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https://hdl.handle.net/2142/122067 Copy

Description

Title

Optimal pricing model for adoption of new products influenced by peer effects

Author(s)

Wang, Yijin

Issue Date

2023-12-06

Director of Research (if dissertation) or Advisor (if thesis)

• Bose, Subhonmesh
• Dong, Roy

Department of Study

Electrical & Computer Eng

Discipline

Electrical & Computer Engr

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

M.S.

Degree Level

Thesis

Keyword(s)

Optimal Control

Abstract

The Bass diffusion model describes the dynamics of adoption of a new product in a population of potential customers. We present an optimal pricing model based on the Bass diffusion model which incorporates price. While there are existing models which depend on price, our formulation can be explained using individual utilities, or measures of reward, and in addition, is amenable to mathematical analysis. Namely, the value function, or maximum reward function, is Lipschitz continuous, and the search for the optimal price can be restricted to a bounded set. Furthermore, for a special case of the model parameters, we establish structural properties of the value function that facilitate algorithmic development for finding the optimal pricing strategy to maximize profits from adoption. Finally, we will provide examples of when the sufficient condition to the special case is violated and show that at least some of the desirable properties no longer hold.

Graduation Semester

2023-12

Type of Resource

Thesis

Copyright and License Information

Copyright 2023 Yijin Wang

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