A dual approach for dynamic pricing in multi-demand markets

TL;DR

This paper investigates the existence and computation of optimal dynamic pricing schemes in multi-demand markets, extending previous results to more complex valuation models and providing efficient algorithms for their determination.

Contribution

It introduces a dual-based approach to establish the existence of optimal dynamic prices in multi-demand markets and offers algorithms for their computation.

Findings

Optimal dynamic prices exist for unit-demand markets.

Optimal dynamic prices exist for multi-demand markets with up to three buyers.

Efficient algorithms are provided for computing these prices.

Abstract

Dynamic pricing schemes were introduced as an alternative to posted-price mechanisms. In contrast to static models, the dynamic setting allows to update the prices between buyer-arrivals based on the remaining sets of items and buyers, and so it is capable of maximizing social welfare without the need for a central coordinator. In this paper, we study the existence of optimal dynamic pricing schemes in combinatorial markets. In particular, we concentrate on multi-demand valuations, a natural extension of unit-demand valuations. The proposed approach is based on computing an optimal dual solution of the maximum social welfare problem with distinguished structural properties. Our contribution is twofold. By relying on an optimal dual solution, we show the existence of optimal dynamic prices in unit-demand markets and in multi-demand markets up to three buyers, thus giving new interpretations of results of Cohen-Addad et al. and Berger et al., respectively. Furthermore, we provide an optimal dynamic pricing scheme for bi-demand valuations with an arbitrary number of buyers. In all cases, our proofs also provide efficient algorithms for determining the optimal dynamic prices.