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Pricing strategies by European traditional and low make up airlines: or, when is it the best time to book on line? Claudio A. Piga* political economy Department, Loughborough University c.a.g.piga@lboro.ac.uk Enrico Bachis Nottingham University Business School lizeb@gwmail.nottingham.ac.uk July 2006 Abstract It is often assumed that the airlines fares emergence monotonically over time, peaking a few days forward the departure. utilise fares for about 650 thousand flights operated by both Low-Cost and across-the-board Service Carriers, we show several instances in which the monotonic prop does not hold. We also show that the volatility of fares increase in the last four weeks before departure, which is the period when the airlines can build up a better prediction for a flights load factor. Finally, especially within the last two weeks, lavish Service Carriers may offer lower fares than those posted by Low Cost Carriers. JEL classification: L11, L13, L93 Keywords: on-line pricing; scathe discrimination; dispersion; yield management. *Contact Author. Address for proportionateness: Economics Department, Loughborough University, Leicestershire, UK, LE11 3TU, Tel: +44 (0) 1509 222701; Fax: (+44)-(0) 1509 223910. Piga gratefully acknowledges receipt of the British Academy Larger Research Grant LRG-35378.

1 1. Introduction The conventional perception on the temporal profile of airlines prices holds that carriers facing uncertain expect can enhance their profits by assigning a monotonically increasing price to different batches of seats (Dana, 2001). Such a recommendation arises from the fact that airlines have to set their price before demand is known, and that the accomplishment costs of adjusting prices in response to legitimate information about demand are high. It is thus primary(prenominal) to verify if the monotonic property is observed in situations where transaction costs are less relevant, i.e., for fares offered on the Internet. In this oblige we use price information for about 650... If you want to soak up a full essay, order it on our website: Ordercustompaper.com

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