Competitive Pricing at Scale: Theory and Practices

In this talk, I will present a series of theoretical and applied work in competitive pricing. A retailer following a competition-based dynamic-pricing strategy tracks competitors’ price changes and then must decide whether and how to respond. The answers require modeling of consumer decisions, unbiased measures of self- and cross-price elasticity as well as competitor impacts. I will discuss how we achieve them through a combination of consumer modeling, experimentation, causal inference, as well as high-dimensional statistics. I will highlight two implementations that each led to 10-20 percent revenue and profit improvement through close collaborations with leading US and international retailers, and a theoretical development that scales up choice models through high dimensional regularization.