Discrete dynamic pricing and application of network revenue management for FlixBus

Christiane Barz (), Simon Laumer (), Marcel Freyschmidt () and Jesús Martínez-Blanco ()
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Christiane Barz: University of Zurich
Simon Laumer: University of Zurich
Marcel Freyschmidt: University of St. Gallen
Jesús Martínez-Blanco: FlixMobility GmbH

Journal of Revenue and Pricing Management, 2023, vol. 22, issue 1, No 3, 16-33

Abstract: Abstract We consider a real discrete pricing problem in network revenue management for FlixBus. We improve the company's current pricing policy by an intermediate optimization step using booking limits from standard deterministic linear programs. We pay special attention to computational efficiency. FlixBus' strategic decision to allow for low-cost refunds might encourage large group bookings early in the booking process. In this context, we discuss counter-intuitive findings comparing booking limits with static bid price policies. We investigate the theoretical question whether the standard deterministic linear program for network revenue management does provide an upper bound on the optimal expected revenue if customer's willingness to pay varies over time.

Keywords: Network revenue management; Discrete pricing; Linear programming; Upper bound; Booking limits; Bid prices (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1057/s41272-021-00365-4

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