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arXiv · 1402.1995

A Note on Lerner Index, Cross-Elasticity and Revenue Optimization Invariants

Alexander Kushkuley·Su-Ming Wu
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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

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Alexander Kushkuley, Su-Ming Wu. 2014-02-09. A Note on Lerner Index, Cross-Elasticity and Revenue Optimization Invariants. https://arxiv.org/abs/1402.1995

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