Dynamic Pricing, Advance Sales, and Aggregate Demand Learning in Airlines

Diego Escobari

MPRA Paper from University Library of Munich, Germany

Abstract: This paper uses a unique U.S. airlines panel data set to empirically study the dynamic pricing of inventories with uncertain demand over a finite horizon. I estimate a dynamic pricing equation and a dynamic demand equation that jointly characterize the adjustment process between prices and sales as the flight date nears. I find that the price increases as the inventory decreases, and decreases as there is less time to sell. Consistent with aggregate demand learning and price adjustment, demand shocks have a positive and much larger effect on prices than the positive effect of anticipated sales.

Keywords: pricing; demand uncertainty; demand learning; airlines (search for similar items in EconPapers)
JEL-codes: C23 D83 D84 L93 (search for similar items in EconPapers)
Date: 2011-12-17
New Economics Papers: this item is included in nep-bec, nep-com, nep-mkt and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Dynamic Pricing, Advance Sales and Aggregate Demand Learning in Airlines (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:38509

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