A Welfare Assessment of Revenue Management Systems

Dupuis Nicolas (), Ivaldi Marc () and Jerome Pouyet
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Dupuis Nicolas: Veltys, 32 Rue de Ponthieu, 75008 Paris, France
Ivaldi Marc: Toulouse School of Economics, 1 Esplanade de l'Université, 31080 ToulouseCedex 06, France

Review of Network Economics, 2020, vol. 19, issue 1, 1-41

Abstract: We study the welfare impact of revenue management, a practice which is widely spread in the transport industry, but whose impact on consumer surplus remains unclear. We develop a theoretical model of revenue management allowing for heterogeneity in product characteristics, capacity constraints, consumer preferences, and probabilities of arrival. We also introduce dynamic competition between revenue managers. We solve this model computationally and recover the optimal pricing strategies. We find that revenue management is generally welfare enhancing as it raises the number of sales.

Keywords: dynamic computational models; intertemporal price discrimination; revenue management; transport fares (search for similar items in EconPapers)
JEL-codes: C63 R41 (search for similar items in EconPapers)
Date: 2020
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Related works:
Working Paper: A Welfare Assessment of Revenue Management Systems (2020)
Working Paper: A Welfare Assessment of Revenue Management Systems (2015)
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DOI: 10.1515/rne-2020-0038

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