Research Article

Dynamic Pricing Strategy for Two-Generation Products under Different Trade-in Subsidy Strategies

Table 1

Model parameters.

ParametersDefinitions

Number of customers who engage in trade-in program in period 2, where, , means myopic consumers, means strategic consumers
Number of customers who do not engage in trade-ins in period 2
Number of customers who want to buy the second-generation new products in period 2
Number of customers who do not want to buy the second-generation new products in period 2
Number of customers who want to buy first-generation new products in period 2 at a discount price
Number of customers who want to buy first-generation new products in period 1
Retail price
Retail price
Discount price
Firm offers a trade-in rebate
The trade-in subsidy provided by the firm
The trade-in subsidy provided by the government
Discount factor
Innovation incremental value
The manufacturing cost of the first-generation new products
The manufacturing cost of the next generation new products
Customers’ valuation of the first-generation new products
Customers’ valuation of the next generation new products
Proportion of the myopic consumer
Firm’s profit in the second period
Firm’s total profit in the two periods