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Advance booking, cancellations, and partial refunds

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Author Info
Staffan Ringbom () (Swedish School of Economics and HECER)
Oz Shy () (University of Haifa and Swedish School of Economics)

Additional information is available for the following registered author(s):

Abstract

We develop methods for calculating profit-maximizing and socially optimal rates of partial refunds on customers' no-shows and cancellations. We demonstrate how partial refunds can be used to screen consumers according to their different probabilities of cancellation and no-shows. Finally, we show that the socially-optimal rate of partial refund exceeds the equilibrium rate of partial refund.

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File URL: http://www.economicsbulletin.com/2004/volume13/EB-04M20001A.pdf
File Format: application/pdf
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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 13 (2004)
Issue (Month): 1 ()
Pages: 1-7
Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Handle: RePEc:ebl:ecbull:v:13:y:2004:i:1:p:1-7

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Postal: Economics Bulletin, Department of Economics, 414 Calhoun Hall, Vanderbilt University, Nashville TN 37235, USA
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Web page: http://www.economicsbulletin.com

For technical questions regarding this item, or to correct its listing, contact: (John Conley).

Related research
Keywords: Advance booking Cancellations No-show Partial refund Reservations

Find related papers by JEL classification:
M2 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics
L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Shiou Shieh, 1996. "Price and Money-Back Guarantees as Signals of Product Quality," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 5(3), pages 361-377, 09. [Downloadable!] (restricted)
  2. repec:att:wimass:19905 is not listed on IDEAS
  3. Courty, Pascal & Li, Hao, 2000. "Sequential Screening," Review of Economic Studies, Blackwell Publishing, vol. 67(4), pages 697-717, October.
    Other versions:
  4. Gale, Ian L. & Holmes, Thomas J., 1992. "The efficiency of advance-purchase discounts in the presence of aggregate demand uncertainty," International Journal of Industrial Organization, Elsevier, vol. 10(3), pages 413-437, September. [Downloadable!] (restricted)
  5. Gale, Ian L & Holmes, Thomas J, 1993. "Advance-Purchase Discounts and Monopoly Allocation of Capacity," American Economic Review, American Economic Association, vol. 83(1), pages 135-46, March. [Downloadable!] (restricted)
  6. Miravete, Eugenio J, 1996. "Screening Consumers through Alternative Pricing Mechanisms," Journal of Regulatory Economics, Springer, vol. 9(2), pages 111-32, March.
  7. Mann, Duncan P & Wissink, Jennifer P, 1990. "Money-Back Warranties vs. Replacement Warranties: A Simple Comparison," American Economic Review, American Economic Association, vol. 80(2), pages 432-36, May. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Oz Shy & Staffan Ringbom, 2005. "Refunds and Collusion," "Marco Fanno" Working Papers 0001, Dipartimento di Scienze Economiche "Marco Fanno". [Downloadable!]
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