The optimal pricing, quantity decision, number of product of online designer with scarcity effect and product variety benefit

Abstract

Online sales platform is a new opportunity for fashion designers to promote their own designs. In this article, we investigate the fashion designer's optimal pricing and production decisions, and product category management by incorporating the scarcity effect and the product variety benefit. We find that the popularity of the designer is very crucial in this problem. Specifically, a more popular designer can increase the price and product quantity to obtain more profit with less number of product designs, while an un-famous designer can benefit from the high demand variability. Moreover, the numerical analysis shows that the un-famous designer can benefit from increasing product variety, but it is not true for the famous designer.