What question did this study set out to answer?

To establish dynamic pricing algorithms that allow firms to learn market demand and maximize revenue while adhering to price fairness and demand fairness constraints.

May 22, 2025Operations Research

Dynamic Pricing with Fairness Constraints

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Authors

MCMaxime C. CohenMcGill University SMSentao MiaoUniversity of Colorado System YWYining WangThe University of Texas at Dallas

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Implication

Algorithmic analysis demonstrates near-optimal regret under price and demand fairness in dynamic consumer markets, indicating that profitability and fairness can coexist.

Key Points

To establish dynamic pricing algorithms that allow firms to learn market demand and maximize revenue while adhering to price fairness and demand fairness constraints.
Formulated mathematical models for price fairness (limiting price disparities across consumer groups and time periods) and demand fairness (balancing realized group demand quotas).
Developed FaPU, an infrequently updated upper confidence bound algorithm designed to satisfy both group and temporal pricing restrictions.
Engineered FaPD, a primal-dual learning algorithm tailored to satisfy aggregate demand quotas with high probability.
FaPU achieved near-optimal regret and matched theoretical lower bounds while maintaining strict pricing boundaries across consumer groups and time.
FaPD enforced aggregate demand quotas with high probability while securing the same near-optimal regret rate as unconstrained pricing algorithms.
The theoretical price of fairness was analytically quantified and extended to dynamic, non-stationary market conditions.

Cite This Study

Cohen et al. (2025) studied this question.

synapsesocial.com/papers/69d97053a1d151c65f6840c9 https://doi.org/10.1287/opre.2023.0123

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Implication

Algorithmic analysis demonstrates near-optimal regret under price and demand fairness in dynamic consumer markets, indicating that profitability and fairness can coexist.

Dynamic Pricing with Fairness Constraints

Discussion

Member takes

Implication

Key Points

Cite This Study

Dynamic Pricing with Fairness Constraints

Discussion

Member takes

Implication

Key Points

Cite This Study

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