Abstract
The pricing behavior of two airlines is examined - one is operated by a welfare-maximizing social planner, the other by an unregulated monopolist. Total capacity is fixed and aggregate demand is uncertain. It is shown that advance-purchase discounts can assist in attaining an efficient allocation of capacity when it is not feasible to operate a spot market on the day of the flight. It is further shown that the planner may offer larger or smaller discounts than the monopolist.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 413-437 |
| Number of pages | 25 |
| Journal | International Journal of Industrial Organization |
| Volume | 10 |
| Issue number | 3 |
| DOIs | |
| State | Published - Sep 1992 |