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Experience Curves And Dynamic Demand Models: Implications For Optimal Pricing Strategies

Robert J. Dolan, Abel P. Jeuland

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Recent empirical research shows that supply and demand conditions are typically not stable over time. The evolution of these factors and the firm's ability to impact the evolution have important pricing implications. This paper presents a general methodology for determining the optimal pricing strategy over the product life cycle given evolutionary forces in the environment, and derives the optimal pricing strategy for some well known dynamic models.