Article | Journal of Business | January 1984

A Simulation Analysis of Alternative Pricing Strategies for Dynamic Environments

by Robert J. Dolan

Abstract

Researchers of the strategic implications of the well-known demand (e.g., adoption and diffusion) and supply (e.g., experience effects) dynamics have typically sought analytical solutions. Their success in this has been achieved partly by limiting the richness of the dynamics considered. This paper describes a simulation modeling capability. SIMSTRAT, which trades off analytical solutions for richer, more realistic representations of supply and demand. We present the model and then the results of our initial investigations using SIMSTRAT. When joined with new computer graphics capabilities, the model is successful in identifying conditions conducive to skim- and penetration-pricing strategies.

Keywords: Demand and Consumers; Price; Mathematical Methods; Supply and Industry;

Citation:

Dolan, Robert J. "A Simulation Analysis of Alternative Pricing Strategies for Dynamic Environments." Journal of Business 57, no. 1 (January 1984).