Seat allocation and pricing in a duopoly in the airline industry. (6th February 2015)

• Record Type: Journal Article
• Authors: Mazumdar, Chandra Sen; Ramachandran, Parthasarathy
• Is Part Of: International journal of revenue management. Volume 8:Number 1(2014)
• Page Start: 20
• Page End: 33
• Publication Date: 2015-02-06
• Subjects: revenue management -- duopoly markets -- differential pricing -- seat allocation -- passenger overflow -- Nash equilibrium -- airline industry -- booking limits; Revenue management -- Periodicals; Business enterprises -- Finance -- Periodicals; 658.1554
• Languages: English
• ISSNs: 1474-7332

Abstract

In this paper, we study the simultaneous problem of seat inventory allocation and pricing in a duopoly market environment in the airline industry. The problem of setting the booking limits and prices when passengers overflow from one airline to the other in response to price is studied. Our analysis indicates that a pure strategy Nash equilibrium is achieved when there are no price differences between the airlines.