Professor Guillermo Gallego from HKUST Made a Speech at School of Economics and Management

On the afternoon of May 30, Professor Guillermo Gallego from Hong Kong University of Science and Technology visited School of Economics and Management and made a speech “Do Consumers Benefit from Dynamic Pricing”.

Professor Gallego pointed out that dynamic pricing is a strategy of manufactures. It adjusts prices dynamically by referring to the marginal value of warehousing and wills of consumers, therefore helping manufactures to maximize the profits. It was commonly thought that the increased profits were squeezed from the consumers’ surplus, however, Professor Gallego proved it wrong. He first supposed a two-phase optimized model in which manufactures and consumers optimize their profits in their phases. Then he discussed the problem of manufactures’ profits and consumers’’ surplus under the hypothesis of limitless time and limited time, and proved that dynamic pricing increased manufactures’ profits and consumers’ surplus at the same time under the condition of multi-need functions. At the end of the lecture, Professor Gallego provided the future research directions in the area and put forward his own views about the extension of the model.