Static Pricing Problems under Mixed Multinomial Logit Demand
Year: 2020
Type: preprint
Abstract: Price differentiation is a common strategy for many transport operators. In this paper, we study a static multiproduct price optimization problem with demand given by a continuous mixed multinomial logit model. To solve this new problem, we design an efficient iterative optimization algorithm that asymptotically converges to the optimal solution. To this end, a linear optimization (LO) problem is formulated, based on the trust-region approach, to find a "good" feasible solution and approximate the problem from below. Another LO problem is designed using piecewise linear relaxations to approximate the optimization problem from above. Then, we develop a new branching method to tighten the optimality gap. Numerical experiments show the effectiveness of our method on a published, non-trivial, parking choice model.
Source: TU/e Research Portal
Authors: Marandi, Ahmadreza, Lurkin, Virginie J.C.
Language: English
Subfield: Transportation
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3024429667