Price Dispersion under Costly Capacity and Demand Uncertainty

摘要: This paper tests the empirical importance of price dispersion predictions Prescott-Eden-Dana (PED) models. Equilibrium is derived in a setting with costly capacity and demand uncertainty where different fares can be explained by selling probabilities. The PED models predict that lower probability leads to higher price. Moreover, this effect larger more competitive markets. Despite its applications several important market phenomena, there exists little evidence supporting models, mostly because difficulty coming up an appropriate measure Using unique panel U.S. airline seat inventories, we find strongly supports both After controlling for aggregate on fares, also obtain second degree discrimination form advance-purchase discounts.