Efficiency considerations in airline pricing and yield management
Consumers and their advocates routinely criticize the practices of price discrimination and yield management. To date, the benefits to consumers of applying revenue management techniques have not been clearly identified. This research assesses airline revenue management techniques on the basis of economic efficiency. This paper demonstrates that a differentiated fare product structure with a range of price levels coupled with effective yield management techniques can provide airline seats to those consumers who value them most when demand exceeds supply. Efficiency in the allocation of limited airline seat inventories can be achieved in the current industry environment, making both society and airlines better off.
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Volume (Year): 30 (1996)
Issue (Month): 4 (July)
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- Borenstein, Severin & Rose, Nancy L, 1994.
"Competition and Price Dispersion in the U.S. Airline Industry,"
Journal of Political Economy,
University of Chicago Press, vol. 102(4), pages 653-83, August.
- Severin Borenstein & Nancy L. Rose, 1991. "Competition and Price Dispersion in the U.S. Airline Industry," NBER Working Papers 3785, National Bureau of Economic Research, Inc.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, March.
- Douglas W. Caves & Laurits R. Christensen & Michael W. Tretheway, 1984. "Economies of Density versus Economies of Scale: Why Trunk and Local Service Airline Costs Differ," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 471-489, Winter.
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