A Note on Lerner Index, Cross-Elasticity and Revenue Optimization Invariants
Optimization and Control
2014-02-11 v1
Abstract
We study common properties of retail pricing models within a general framework of calculus of variations. In particular, we observe that for any demand model, optimal de-seasoned revenue rate divided by price elasticity is time invariant. We also obtain a generalization of a well known inverse relationship between price elasticity of demand and Lerner index. These invariance results are illustrated by two contrasting examples of markdown optimization and optimal continuous replenishment
Keywords
Cite
@article{arxiv.1402.1995,
title = {A Note on Lerner Index, Cross-Elasticity and Revenue Optimization Invariants},
author = {Alexander Kushkuley and Su-Ming Wu},
journal= {arXiv preprint arXiv:1402.1995},
year = {2014}
}