Dynamic Wholesale Pricing under Censored-Demand Learning
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arXiv
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| Format: | Preprint |
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2026
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| _version_ | 1866917341062758400 |
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| author | Deligiannis, Michalis Scarsini, Marco Venel, Xavier |
| author_facet | Deligiannis, Michalis Scarsini, Marco Venel, Xavier |
| contents | We study a finite-horizon dynamic wholesale-price contract between a manufacturer and a retailer, both of whom observe only sales, rather than the true demand. When the retailer stocks out, unmet demand is unobserved, so both parties update a common posterior over the demand distribution from sales data. Each period, the manufacturer sets the wholesale price, the retailer chooses an order quantity, and the public belief state is updated. We characterize Markov perfect equilibria as functions of this public belief. Our main results are as follows: for Weibull demand, we extend the well-known scaling approach to this strategic learning setting, prove the existence of an equilibrium, and reduce computation to a standardized one-parameter recursion; for exponential demand, we show that the equilibrium is unique and computable via a simple backward recursion. |
| format | Preprint |
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arxiv_https___arxiv_org_abs_2603_13599 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | Dynamic Wholesale Pricing under Censored-Demand Learning Deligiannis, Michalis Scarsini, Marco Venel, Xavier Computer Science and Game Theory Theoretical Economics Optimization and Control 91A20, 91A25, 91A27, 90B05 We study a finite-horizon dynamic wholesale-price contract between a manufacturer and a retailer, both of whom observe only sales, rather than the true demand. When the retailer stocks out, unmet demand is unobserved, so both parties update a common posterior over the demand distribution from sales data. Each period, the manufacturer sets the wholesale price, the retailer chooses an order quantity, and the public belief state is updated. We characterize Markov perfect equilibria as functions of this public belief. Our main results are as follows: for Weibull demand, we extend the well-known scaling approach to this strategic learning setting, prove the existence of an equilibrium, and reduce computation to a standardized one-parameter recursion; for exponential demand, we show that the equilibrium is unique and computable via a simple backward recursion. |
| title | Dynamic Wholesale Pricing under Censored-Demand Learning |
| topic | Computer Science and Game Theory Theoretical Economics Optimization and Control 91A20, 91A25, 91A27, 90B05 |
| url | https://arxiv.org/abs/2603.13599 |