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An effect of consumer's earlier decision to purchase a discount ticket

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  • Ishii, Ryosuke
  • Nakagawa, Kuninori
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    Abstract

    In this article, we consider how effect consumer's earlier decision to purchase a discount ticket will have on the competition, price and timetable, between airlines. We focus on a relationship between consumer's purchasing behavior and a competition between airlines. We consider that a consumer can purchase a ticket two times, i.e. ex-ante and ex-post, corresponding to this timing, airlines also can set their prices of tickets. The main conclusion highlighted by this article is that, in a subgame perfect equilibrium, each airline's expected profit is unique and timetable is socially optimal regardless to a consumer's purchasing behavior.

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    File URL: http://barrel.ih.otaru-uc.ac.jp/bitstream/10252/4502/1/DP_131.pdf
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    Bibliographic Info

    Paper provided by Otaru University of Commerce in its series ビジネス創造センターディスカッション・ペーパー (Discussion papers of the Center for Business Creation) with number 10252/4502.

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    Length: 8 pages
    Date of creation: 14 Feb 2011
    Date of revision:
    Publication status: Published in Discussion paper series (2011), 131: 1-8
    Handle: RePEc:ota:busdis:10252/4502

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    Postal: 3-5-21 Midori, Otaru, 047-8501
    Web page: http://www.otaru-uc.ac.jp/dept/econ/
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    1. Encacoua, D. & Moreaux, M. & Perrot, A., 1995. "Compatibility and Competition in Airlines: Demand Side Network Effect," Papiers d'Economie Mathématique et Applications 95.21, Université Panthéon-Sorbonne (Paris 1).
    2. Alberto Gaggero & Claudio A. Piga, 2008. "Airline Competition in the British Isles," Discussion Paper Series 2008_12, Department of Economics, Loughborough University, revised Oct 2008.
    3. d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-50, September.
    4. Jan Brueckner & Ricardo Flores-Fillol, 2007. "Airline Schedule Competition," Review of Industrial Organization, Springer, vol. 30(3), pages 161-177, May.
    5. Brueckner, Jan K., 2002. "Network Structure and Airline Scheduling," Working Papers 02-0112, University of Illinois at Urbana-Champaign, College of Business.
    6. Salvanes, Kjell G. & Steen, Frode & Sorgard, Lars, 2005. "Hotelling in the air? Flight departures in Norway," Regional Science and Urban Economics, Elsevier, vol. 35(2), pages 193-213, March.
    7. Schipper, Youdi & Rietveld, Piet & Nijkamp, Peter, 2003. "Airline deregulation and external costs: a welfare analysis," Transportation Research Part B: Methodological, Elsevier, vol. 37(8), pages 699-718, September.
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