Companies in a variety of industries (e.g., airlines, hotels, theaters) often use last-minute sales to dispose of unsold capacity. Although this may generate incremental revenues in the short term, the long-term consequences of such a strategy are not immediately obvious: More discounted...

We study how consumers with waiting cost disutility choose between two congested services of unknown service value. Consumers observe an imperfect private signal indicating which service facility may provide better service value as well as the queue lengths at the service facilities before...

Firms in several markets attract consumers by offering discounts in other unrelated markets. This promotion strategy, which we call "cross-market discounts," has been successfully adopted in the last few years by many grocery retailers in partnership with gasoline retailers across North America,...

We study the bidding strategies of vertically differentiated firms that bid for sponsored search advertisement positions for a keyword at a search engine. We explicitly model how consumers navigate and click on sponsored links based on their knowledge and beliefs about firm qualities. Our model...

We propose a framework for the joint study of the consumer’s decision of where to buy and what to buy. The framework is rooted in utility theory where the utility is for a particular channel/brand combination. The framework contains firm actions, the consumer search process, the choice...

Several researchers have proposed models of buyer behavior in noncontractual settings that assume that customers are "alive" for some period of time and then become permanently inactive. The best-known such model is the Pareto/NBD, which assumes that customer attrition (dropout or "death") can...

While millions of products are sold on its retail platform, Amazon.com itself stocks and sells only a very small fraction of them. Most of these products are sold by third-party sellers who pay Amazon a fee for each unit sold. Empirical evidence clearly suggests that Amazon tends to sell...

In this paper we characterize the impact of production technology on the optimal product line design. We analyze a problem in which a manufacturer segments the market on quality attributes and offers products that are partial substitutes. Because consumers self-select from the product line,...

Internet companies extensively use the practice of drop-shipping, where the wholesaler stocks and owns the inventory and ships products directly to customers at retailers' request. Under the drop-shipping arrangement, the supply chain benefits from risk pooling because the inventory for multiple...