Existence and characterization of optimal dynamic pricing strategies with reference-price effects

In this paper, we revisit the problem of existence of an optimal dynamic pricing strategy when the demand depends on a reference price. Using alternative assumptions and technique to those typically used in the literature, we show the existence of a unique pricing policy parametrized in the initial value of the reference price. Our main results are as follows: if this value is low enough, then the best option is to implement a penetration pricing. If it is high enough, then price skimming is optimal. If the initial reference price has an intermediate value, then constant pricing throughout the planning horizon is optimal.