Title: Competition in the advanced sale of service capacity

Authors: Irene C.L. Ng, Khai Sheang Lee

Addresses: Marketing at the School of Business and Economics, University of Exeter, Streatham Court, Rennes Drive, Exeter EX4 4PU, UK. ' Department of Marketing, Faculty of Business Administration, National University of Singapore, 10 Kent Ridge Crescent, 119260 Singapore

Abstract: Since service production and consumption are inseparable, many service firms sell their capacity in advance. This paper examines the optimality and practice of advanced sale of service capacity under duopolistic competition. Using a game-theoretic approach, it attempts to explain why, despite sophisticated practices of advanced sale in many service industries, many service firms still do not sell in advance. It demonstrates that competition and market price sensitivity to a firm|s capacity can impact not only a firm|s decision to sell in advance, but also its pricing and capacity allocation decisions.

Keywords: services; yield management; competitive strategy; game theory; advanced sale; service capacity; competition; market price; pricing; capacity allocation.

DOI: 10.1504/IJRM.2008.020724

International Journal of Revenue Management, 2008 Vol.2 No.4, pp.307 - 326

Published online: 12 Oct 2008 *

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