Technical Note—Optimal Pricing Under Multiple-Discrete Customer Choices and Diminishing Return of Consumption

Customers make purchase decisions based on the attributes of the products offered and their prices. While the customer selects only one unit of a product in some settings, she purchases multiple products and even possibly multiple units of each product in other settings. Although several studies in the literature have addressed the former case, little attention has been paid to the latter case, this paper’s subject. In this paper, the authors consider the customer's problem and show that the set of products she purchases is one of the ordered sets based on the product attribute and prices. This paper shows that the firm's optimal pricing problem can be solved efficiently based on another ordering among the products.