Advance-Purchase Discounts and Monopoly Allocation of Capacity

Ian L Gale and Thomas Holmes ()

American Economic Review, 1993, vol. 83, issue 1, 135-46

Abstract: Optimal pricing by a monopoly airline that faces capacity constraints during the peak demand period is studied. The existence of capacity constraints means that in order to expand outp ut the airline must divert demand from the peak period to the off-peak period. A particular advance-purchase discount policy is shown to be the profit-maximizing method of selling tickets. If the advance-purchase requirement were infeasible, output and total surpl us would both be lower. Copyright 1993 by American Economic Association.

Date: 1993
References: Add references at CitEc
Citations: View citations in EconPapers (148)

Downloads: (external link)
http://links.jstor.org/sici?sici=0002-8282%2819930 ... 3B2-%23&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
Working Paper: ADVANCE-PURCHASE DISCOUNTS AND MONOPOLY ALLOCATION OF CAPACITY (1990)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:83:y:1993:i:1:p:135-46

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().