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

  • Ishii, Ryosuke
  • Nakagawa, Kuninori
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    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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    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
    Contact details of provider: Postal: 3-5-21 Midori, Otaru, 047-8501
    Web page: http://www.otaru-uc.ac.jp/dept/econ/

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    1. Brueckner, Jan K., 2002. "Network Structure and Airline Scheduling," Working Papers 02-0112, University of Illinois at Urbana-Champaign, College of Business.
    2. Encaoua, David & Moreaux, Michel & Perrot, Anne, 1996. "Compatibility and competition in airlines demand side network effects," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 701-726, October.
    3. 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.
    4. repec:cup:cbooks:9780521305525 is not listed on IDEAS
    5. 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.
    6. 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.
    7. Gaggero, Alberto A. & Piga, Claudio A., 2010. "Airline competition in the British Isles," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(2), pages 270-279, March.
    8. Jan Brueckner & Ricardo Flores-Fillol, 2007. "Airline Schedule Competition," Review of Industrial Organization, Springer, vol. 30(3), pages 161-177, May.
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