The retail industry has been tracking consumer purchases for quite some time and pushing discounts and special offers on future products based on past purchases. What makes Dynamic Pricing a bit more intrusive today is the ability for manufacturers and service providers, including the airline industry, to offer the same seat to different people for different prices, based solely on personal demographics such as the type of car you drive, hotels you book, and restaurants you frequent.
The dissertation consists of two essays on different aspects of dynamic pricing with applications to the U. The first essay studies how a firm's ability to price discriminate over time affects production, product quality, and product allocation among consumers. The theoretical model has forward-looking heterogeneous consumers who face a monopoly firm.
I use this model to study the time paths of prices for airline tickets offered on monopoly routes in the U. Using estimates of the model's demand and cost parameters, I compare the welfare travelers receive under the current system to several alternative systems, including one in which free resale of airline tickets is allowed.
The second essay, motivated by pricing practices in the airline industry, studies the incentives of players to publicly and independently limit the sets of actions they play later in a game.
I find that to benefit from self-restraint, players have to exclude all actions that create deviations for them and keep some actions that can deter deviations of others. I develop a set of conditions under which these strategies form a subgame perfect equilibrium and show that in a Bertrand oligopoly, firms can mutually gain from self-restraint, while in a Cournot oligopoly they cannot.
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Confirm this request You may have already requested this item. Please select Ok if you would like to proceed with this request anyway.Airline companies have traditionally employed flexible pricing concepts in very creative ways to offset the risks associated with unsold inventory and overbooking. But it would be plain wrong to call it "dynamic pricing" in the truest sense.
Feb 25, · Dynamic pricing isn’t new. Deregulation of the airline industry led to powerful yield-management software that took hold in the s to help balance supply . The airline industry has made exceptional progress around revenue management; however, it lags behind in terms of pricing. Today, many other industries are leveraging pricing strategies to better market to their customers and competitively compete in dynamic environments.
An Empirical Model of Dynamic Limit Pricing: The Airline Industry Chris Gedge James W. Robertsy Andrew Sweetingz July 5, Abstract Theoretical models of strategic investment often assume that information is incom-.
“Many airlines are starting to implement dynamic pricing, and most travelers are clueless about what it is,” the survey’s authors said in an accompanying post.
Two different Digonex clients (Icon Concerts and the Indianapolis Zoo) were featured in an article on dynamic pricing by AP business writer Joseph Pisanti, which further discusses the expanding uses of dynamic pricing by amusement parks, bars, and Broadway shows.