Title: Seat allocation and pricing in a duopoly in the airline industry

Authors: Chandra Sen Mazumdar; Parthasarathy Ramachandran

Addresses: Department of Management Studies Indian Institute of Science, Bangalore 560 012, India. ' Department of Management Studies Indian Institute of Science, Bangalore 560 012, India.

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.

Keywords: revenue management; duopoly markets; differential pricing; seat allocation; passenger overflow; Nash equilibrium; airline industry; booking limits.

DOI: 10.1504/IJRM.2014.067332

International Journal of Revenue Management, 2014 Vol.8 No.1, pp.20 - 33

Received: 16 Jul 2013
Accepted: 16 Jun 2014

Published online: 04 Feb 2015 *

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