Dynamic Pricing and Demand Volatility: Evidence from Restaurant Food Delivery

Alexander MacKay, Dennis Svartbäck and Anders G. Ekholm

Harvard Business School Working Paper, No. 23-007, July 2022. (Revised December 2023.)

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Abstract

We study the staggered adoption of a dynamic pricing algorithm. We find that high-frequency pricing led to lower prices and lower demand volatility. Our findings indicate that consumers strategically time their purchases, and we highlight how firms can benefit from this strategic behavior through dynamic pricing that results in lower costs.