Dupuit, Colson and the early days of the SNCF: The Road to Yield Management

Joachim Paoli ()
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Joachim Paoli: UJML - Université Jean Moulin - Lyon 3 - Université de Lyon, Iaelyon - Iaelyon School of Management - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon, MAGELLAN - Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon

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Abstract: The yield management is the main method used nowadays by airlines companies in order to set their prices. It is often presented as an innovation developed in the airline sector in the United States at the end of the 1970's. However, this paper demonstrates that it has important similarities with an older theory: the pricing method of infrastructures exploited by a monopoly proposed by Jules Dupuit in 1844, developed by Clément Colson in 1890 and applied by the SNCF (French railroad company) at its creation in 1937. Indeed, yield management is based on Dupuit's idea of charging each user a price as close as possible to the use value attributed to transportion. To get users to reveal this use value, low-cost companies use an option mechanism found in Colson's developments and in the pricing system used when the SNCF was created.

Date: 2024-04-15
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Published in Revue d'économie financière (édition en anglais), 2024, 153, pp.277-287

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04572580

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