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Discrete dynamic pricing and application of network revenue management for FlixBus

Author

Listed:
  • Christiane Barz

    (University of Zurich)

  • Simon Laumer

    (University of Zurich)

  • Marcel Freyschmidt

    (University of St. Gallen)

  • Jesús Martínez-Blanco

    (FlixMobility GmbH)

Abstract

We consider a real discrete pricing problem in network revenue management for FlixBus. We improve the company's current pricing policy by an intermediate optimization step using booking limits from standard deterministic linear programs. We pay special attention to computational efficiency. FlixBus' strategic decision to allow for low-cost refunds might encourage large group bookings early in the booking process. In this context, we discuss counter-intuitive findings comparing booking limits with static bid price policies. We investigate the theoretical question whether the standard deterministic linear program for network revenue management does provide an upper bound on the optimal expected revenue if customer's willingness to pay varies over time.

Suggested Citation

  • Christiane Barz & Simon Laumer & Marcel Freyschmidt & Jesús Martínez-Blanco, 2023. "Discrete dynamic pricing and application of network revenue management for FlixBus," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(1), pages 16-33, February.
    • Handle: RePEc:pal:jorapm:v:22:y:2023:i:1:d:10.1057_s41272-021-00365-4
    DOI: 10.1057/s41272-021-00365-4
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