Incorporating competitive price information into revenue management

In a marketplace with many service providers offering the same or similar products, demand is largely driven by competition. This competitive aspect, however, is not considered explicitly in most existing revenue management (RM) approaches. This paper introduces a new approach that uses a recently developed demand model and competitive price information. A simulation study was conducted to compare the performance of this new approach and several other approaches. Our results lead to several observations and insights into the performance of different approaches and show that incorporating competitive data into RM is a promising direction.