A Model of Airline Pricing: Capacity Constraints and Deadlines
- Topics:
- Pricing and Margins,
- Pricing Strategy
- Tags:
- Capacity Constraint,
- Marketing,
- Marketing Research,
- Pennsylvania State University,
- Pricing,
- Pricing Strategy
- Source:
- Pennsylvania State University
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Overview: This paper studies monopolistic pricing, with a capacity constraint, of a good that loses its value T periods after it is put on sale for the first time. Buyers only obtain utility just before the good loses its value. Examples of such goods include airline tickets and hotel rooms. This paper presents a three-period model with a single seller facing a capacity constraint, where the good being sold loses its value after the third period. The equilibrium price path is obtained and found to be non-decreasing, U-shaped or horizontal for the relevant range of parameter values.
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Format: PDF | Size: 427KB | Date: May 2004 | Pages: 51
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