The efficiency of advance-purchase discounts in the presence of aggregate demand uncertainty

Article Abstract:

Advance-purchase discounts promote efficiency given fluctuating and uncertain demand and the high cost of an adjustable price system. A study of the pricing behavior of both a welfare-maximizing and a monopolistic airline shows that such discounts are more efficient in allocating limited seats on a peak flight than just offering lower tickets for off-peak flights. The monopolist may offer bigger or smaller discounts than the social planner. However, the two solutions coincide when capacity is near peak demand. The results are extended to the case of duopolies.

Air transportation, scheduled, Economic aspects, Finance, Airlines, Monopolies, Resource allocation, Price discrimination

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Innovative activity and sunk cost

Article Abstract:

The innovative activity in a general framework with time-dependent rewards and sunk costs is examined. It is reported that when firms are identical innovation is delayed by an increase in the number of firms or a decrease in the size of the reward and shows that under certain conditions there is qualitatively different equilibrium behavior.

United States, Management-Creativity, Venture Analysis, Behavior, Business enterprises, Business creativity

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Effective price-matching: a comment

Article Abstract:

Issues concerning prices are discussed with reference to the effect of adopting price-matching and price-beating policies. The incidence of monopoly pricing is shown to reoccur if effective price strategies are used.

Competition (Economics)

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