Multi-class Demand with Capacity Constraints: Theory and Estimation

Bryn Battersby and Eddie Oczkowski

Journal of Transport Economics and Policy, 2010, vol. 44, issue 1, 59-78

Abstract: This paper develops a theory of consumer discrete choice and an empirical model for multi-class demand in the presence of capacity constraints. A key aspect of the proposed theory is that the probability of the availability of a discrete alternative may be manipulated by expending resources. Optimal choice behaviour is described by the interaction between the expenditure of resources on manipulability and the relative utility benefits gained from each of the alternatives. In this context, the theory proposes that the expected available capacity for an alternative has an explicit impact on consumer choice and should be used in demand estimation. Empirically, a two-limit seven (class) equation multivariate Tobit model of regional airline travel in Australia is estimated and confirms the importance of expected capacity constraints in explaining the demand for the different classes of air travel. The implications for airline class settings strategies are also discussed. © 2010 LSE and the University of Bath

Date: 2010
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.catchword.com/cgi-bin/cgi?ini=bc&body=l ... 20100101)44:1L.59;1- (text/html)
Access to full text is restricted to subscribers.

Related works:
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:tpe:jtecpo:v:44:y:2010:i:1:p:59-78

Access Statistics for this article

Journal of Transport Economics and Policy is currently edited by B T Bayliss, S A Morrison, A Smith and D Graham

More articles in Journal of Transport Economics and Policy from University of Bath
Bibliographic data for series maintained by Christopher F. Baum ().