Escobari, Diego
(2011):
*Dynamic Pricing, Advance Sales, and Aggregate Demand Learning in Airlines.*
Forthcoming in: Journal of Industrial Economics

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## 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.

Item Type: | MPRA Paper |
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Original Title: | Dynamic Pricing, Advance Sales, and Aggregate Demand Learning in Airlines |

Language: | English |

Keywords: | pricing; demand uncertainty; demand learning; airlines |

Subjects: | L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L93 - Air Transportation D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D84 - Expectations ; Speculations C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness |

Item ID: | 38509 |

Depositing User: | Diego Escobari |

Date Deposited: | 02 May 2012 10:41 |

Last Modified: | 27 Sep 2019 12:50 |

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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/38509 |