Early Competition on Discount Tickets
Ryosuke Ishii and
Journal of Transport Economics and Policy, 2015, vol. 49, issue 2, 219-235
We consider the relationship between passenger behaviour and airline behaviour through flight scheduling and price competition. We focus on how an option for early ticket purchase affects the competition between two airlines. In our model, airlines set two ticket prices for passengers: one before the passengers know when they would take the flight; and the other after they know the most preferable time to take the flight. We find that in a subgame perfect equilibrium, airlines operate flights on an efficient schedule from the perspective of passengers. © 2015 LSE and the University of Bath
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