Dynamic and targeted bundle pricing of two independently valued products

Gökgür, Burak; Karabatı, Selçuk

doi:10.1016/j.ejor.2019.05.022

Cited by 16 publications

(4 citation statements)

References 57 publications

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“…Joint pricing may also refer to bundling; see e.g. Bhargava (2013) and Gökgür and Karabati (2019). In the insurance industry, bundling is also subject to legal constraints in some countries.…”

Section: Discussionmentioning

confidence: 99%

Pricing insurance policies with offsetting relationship

Hanbali

2021

Ann. actuar. sci.

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This paper investigates the benefits of incorporating diversification effects into the pricing process of insurance policies from two different business lines. The paper shows that, for the same risk reduction, insurers pricing policies jointly can have a competitive advantage over those pricing them separately. However, the choice of competitiveness constrains the underwriting flexibility of joint pricers. The paper goes a step further by modelling explicitly the relationship between premiums and the number of customers in each line. Using the total collected premiums as a criterion to compare the competing strategies, the paper provides conditions for the optimal pricing decision based on policyholders’ sensitivity to price discounts. The results are illustrated for a portfolio of annuities and assurances. Further, using non-life data from the Brazilian insurance market, an empirical exploration shows that most pairs satisfy the condition for being priced jointly, even when pairwise correlations are high.

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Section: Discussionmentioning

confidence: 99%

Pricing insurance policies with offsetting relationship

Hanbali

2021

Ann. actuar. sci.

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“…, 2020), limited stock (Cao et al. , 2016a, b; Gökgür and Karabatı, 2019) and market power (Pan and Zhou, 2017; Giri et al. , 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

Marine tourism omnichannel coordination

Tang

Chen

Peng

2022

MAEM

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PurposeWith the growing economic impact of e-commerce and the increasing trend of omnichannel mode, more considerate services can be provided to customers. This paper aims to explore the optimal practice of business strategies and enrich the research content of marine tourism omnichannel.Design/methodology/approachThis paper studies the optimal practice of bundling pricing and service effort strategies between two tourism suppliers (TSs) and a travel agent (TA) who distributes complementary products in marine tourism omnichannel considering joint efforts of both sides. This study develops five models by Stackelberg and Nash game and introduces the revenue-sharing contract. All outcomes/results are analyzed and the corresponding numerical and sensitivity analyses are conducted to derive more managerial implications and business insights.FindingsThe main findings show that bundling price is directly proportional to inter-channel integration coefficient and service effort level coefficient, and inversely proportional to the price elasticity coefficient. TA tends to provide a higher level of service effort than TSs when TA plays a dominant role. Improving the service effort level unduly leads to a decline in profits. Moreover, TSs and TA can reach a win-win situation under the coordination mechanism and the marine tourism omnichannel can achieve the best performance.Originality/valueA novel and useful approach towards joint equilibrium decisions of bundle pricing and service efforts in marine tourism omnichannel with complementary tourism products under different operational strategies is proposed.

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“…[26] investigates the bundling of retail products with non-zero marginal cost of production where firms may decide to offer a pure bundle or unbundled products (not mixed bundling, where both the individual products and the bundle may be purchased) and show in an analytical context that the optimal decision of the firm depends on the correlation of the demand for the products. A computational approach is used by [20] which also considers the correlation of demand for two non-information retail products where a retailer wishes to clear the inventory of one of the products. A mixed bundling approach is studied by [33] for telecommunications services, under the assumption that these are information goods and considering the cases of available demand data as well as that of incomplete information and comparing the model results to bundle prices observed in the market.…”

Section: Theoretical Modelsmentioning

confidence: 99%

Content and Access Provision in a Discrete Competition Model

Potgieter¹,

Howell²

2021

ORION

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The non-rival, non-excludable and infinitely expansible characteristics of digital goods with marginal cost of zero strongly favours the use of bundling strategies. Theoretical tractability requires most models in the current literature to make highly stylized assumptions, rarely observed or anticipated in the real-life situations, motivating inquiry. This paper considers a competition model in which: * the firms, consumers and differentiated products are finite in number; * prices are discrete and not continuous; * consumers may purchase multiple items in a single product category where the degree of complementarity or substitutability of the product categories can also vary across consumers; and * where consumer-specific cost savings are obtained when purchasing multiple items from the same firm. Approximate solutions are obtained through numerical simulation. Firms act in concert to maximise the total firm revenue. Our main finding is that the interplay between maximal firm revenue, consumer surplus and prices is very complex and that high firm revenue and high consumer surplus are not antithetic. It suggests also that consumer surplus and market concentration are not necessarily related. Many market outcomes that are observed may be due to chance rather than design as diverse outcomes can accompany situations that are, to the firms, difficult to distinguish.

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Dynamic and targeted bundle pricing of two independently valued products

Cited by 16 publications

References 57 publications

Pricing insurance policies with offsetting relationship

Pricing insurance policies with offsetting relationship

Marine tourism omnichannel coordination

Content and Access Provision in a Discrete Competition Model

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