Advance booking, cancellations, and partial refunds

Staffan Ringbom () and Oz Shy
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Staffan Ringbom: Swedish School of Economics and HECER

Economics Bulletin, 2004, vol. 13, issue 1, 1-7

Abstract: We develop methods for calculating profit-maximizing and socially optimal rates of partial refunds on customers' no-shows and cancellations. We demonstrate how partial refunds can be used to screen consumers according to their different probabilities of cancellation and no-shows. Finally, we show that the socially-optimal rate of partial refund exceeds the equilibrium rate of partial refund.

JEL-codes: L9 M2 (search for similar items in EconPapers)
Date: 2004-01-20
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Citations: View citations in EconPapers (8)

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