Posted Price Mechanisms for Online Allocation with Diseconomies of Scale
Hossein Nekouyan Jazi, Bo Sun, Raouf Boutaba, Xiaoqi Tan

TL;DR
This paper introduces a new randomized posted price mechanism for online allocation with diseconomies of scale, achieving near-optimal performance across small and large inventories, improving upon prior deterministic methods.
Contribution
It proposes a novel randomized dynamic pricing mechanism that provides tighter bounds on competitive ratio and performs optimally for both small and large inventories in OSDoS.
Findings
Achieves tighter lower bounds on competitive ratio.
Ensures optimal performance in small inventory settings.
Surpasses existing mechanisms in large inventory scenarios.
Abstract
This paper addresses the online -selection problem with diseconomies of scale (OSDoS), where a seller seeks to maximize social welfare by optimally pricing items for sequentially arriving buyers, accounting for increasing marginal production costs. Previous studies have investigated deterministic dynamic pricing mechanisms for such settings. However, significant challenges remain, particularly in achieving optimality with small or finite inventories and developing effective randomized posted price mechanisms. To bridge this gap, we propose a novel randomized dynamic pricing mechanism for OSDoS, providing a tighter lower bound on the competitive ratio compared to prior work. Our approach ensures optimal performance in small inventory settings (i.e., when is small) and surpasses existing online mechanisms in large inventory settings (i.e., when is large), leading to the…
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Taxonomy
TopicsAuction Theory and Applications · Digital Platforms and Economics · Consumer Market Behavior and Pricing
