Dynamic Pricing Model With Goodwill Influenced By Price-Quality Effect

Dynamic pricing refers to the enterprise which sells the same product to different consumers or market segment with the different price according to the market demand and its own supply capacity, so that the enterprise can maximize the profit. In fact, this kind of pricing is a pricing strategy. Pricing and quality decision are an important factors for the enterprise in the fierce market competition.In this paper, we consider an important phenomenon of price-quality effect in goodwill formulation process. Based on dynamic pricing theory and familiar Ner-love-Arrow models, we set up a dynamic model from the two angles of high quality and low quality strategy, put price and quality of products as the decision variable, build the product sales function and profit function to make the firm’s profit maxium. We make depth analysis through calculation, and obtain the following conclusions:In the high quality strategy, with the price-quality effect, the optimal quality and dynamic pricing has some rules and specific performance:(ⅰ) the enterprise will take the optimal quality settings which can cause the minimum quality level with price-quality effect;(ⅱ) equilibrium price increases in the sensitive coefficient of vo-lume coefficient, quality of the critical value, the initial market share, the effect price of goodwill price;(ⅲ) equilibrium price decreases as the discount factor and com-modity with time lapse rate increases;(ⅳ) without the influence coefficient on the goodwill of equilibrium price and quality.In the low quality strategy, without price-quality effect, the best quality and dy-namic pricing of enterprise will also show a certain regularity and specific perfor-mance:(ⅰ) the optimal quality will be set zero;(ⅱ) the equilibrium price will increase in the initial market share;(ⅲ) the equilibrium price decreases with the quality of goodwill influence coefficient, quality, price on the critical value of sales of goods with time sensitive coefficient and decreasing rate of increase, consumer sensitive coefficient on the product of goodwill;(ⅳ) the marginal cost of equilibrium price and the price impact coefficient of goodwill, as well as the quality of the discount factor is irrelevant.