The Pricing Strategy and Intermediary Selling Mechanism for Airline with Strategic Passengers Behavior

doi:10.3969/j.issn.1007-7375.2018.05.004

Abstract

Abstract: The dynamic pricing strategy for airline tickets through intermediary selling mechanism is investigated when the passengers are strategic and their valuation follows a Uniform distribution, and the effectiveness of the intermediary selling to alleviate strategic behavior is analyzed. The equilibrium price for both the airline and intermediary is proved by introducing a two-period dynamic pricing model, and the effectiveness of the intermediary selling from the point of revenue is discussed. It is concluded that when the discount factor for intermediary is located in a certain range, the intermediary selling mechanism can alleviate strategic behavior and have the feasibility to implement. Through numerical examples, the results of theoretical analysis is verified, and it is also found that intermediary selling mechanism cannot completely eliminate the passenger strategic behavior, and a certain level of competition between the airline and the intermediary may bring more revenue.

Key words: dynamic pricing, strategic behavior, intermediary selling, valuation uncertainty

CLC Number:

F272.3

LI Hao, CHEN Chunyang, ZOU Liuxin. The Pricing Strategy and Intermediary Selling Mechanism for Airline with Strategic Passengers Behavior[J]. Industrial Engineering Journal , 2018, 21(5): 24-30,49.

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