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Partial refunds as a strategic price commitment device in advance selling in a service industry

Author

Listed:
  • Zhang, Zelin
  • Lim, Weishi
  • Cui, Haitao
  • Wang, Ze

Abstract

Over the past decade, consumers’ strategic waiting behavior in anticipation of a price markdown has become increasingly common when advance selling is used. Recently, studies in the durable goods industry show that a partial refund strategy can activate the price-commitment mechanism to counter consumers’ strategic waiting, which is primarily driven by both consumers’ and retailers’ behaviors that discount the future. In this research, we investigate the possibility of using this partial refund strategy in a service industry context in which demand uncertainty and consumption state uncertainty act as major influential factors.

Suggested Citation

  • Zhang, Zelin & Lim, Weishi & Cui, Haitao & Wang, Ze, 2021. "Partial refunds as a strategic price commitment device in advance selling in a service industry," European Journal of Operational Research, Elsevier, vol. 291(3), pages 1062-1074.
    • Handle: RePEc:eee:ejores:v:291:y:2021:i:3:p:1062-1074
    DOI: 10.1016/j.ejor.2020.10.001
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    Cited by:

    1. Ling Zhao & Anquan Zou & Pin Zhou, 2023. "E‐retailer's dynamic inventory and pricing policy with price‐protection services," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 490-501, January.
    2. Wang, Ruibing & Wang, Qiao & Chiang, Wei-yu Kevin, 2024. "Optimal promotional mix and pricing when faced with uncertain product value," European Journal of Operational Research, Elsevier, vol. 313(2), pages 637-651.
    3. Huang, Zongsheng & Huang, Lingchen & Zhao, Yingxue & Meng, Xiaoge, 2021. "Money-back guarantee in the presence of strategic customer behavior," International Journal of Production Economics, Elsevier, vol. 239(C).

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