I study a dynamic production problem with uncertainty about demand in a monopolistic market regime. The monopolist’s objective is to find a production plan that maximizes the expected profit by balancing the incentive to increase revenues and the cost of information gathering. A closed solution is given under the assumption of a uniform probability distribution of demand. The optimal production in each period is shown to be an adaptive learning process.
Uncertain demand and the gathering of information: a discrete dynamic perspective
Bertarelli, Silvia
Primo
2024
Abstract
I study a dynamic production problem with uncertainty about demand in a monopolistic market regime. The monopolist’s objective is to find a production plan that maximizes the expected profit by balancing the incentive to increase revenues and the cost of information gathering. A closed solution is given under the assumption of a uniform probability distribution of demand. The optimal production in each period is shown to be an adaptive learning process.File in questo prodotto:
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