We characterize the optimal dynamic price policy of a monopolist who faces quot;viscousquot;demand for its services. Demand is viscous if it adjusts relatively slowly to price changes.We show that with the optimal policy the monopolist stops short of achieving 100% marketpenetration, even when...

In many markets, demand adjusts slowly to changes inprices, i.e., demand is quot;viscous.quot; For such a market, the time path of a firm'sprices acquires added significance, compared with the case of instantaneousdemand response. In this paper I explore some problems in strategic dynamicpricing...