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Are Consumers Strategic? Structural Estimation from the Air-Travel Industry

Li, Jun ; Granados, Nelson ; Netessine, Serguei

Management science, 2014-09, Vol.60 (9), p.2114-2137 [Periódico revisado por pares]

Linthicum: INFORMS

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Título:
Are Consumers Strategic? Structural Estimation from the Air-Travel Industry
Autor: Li, Jun ; Granados, Nelson ; Netessine, Serguei
Assuntos: Air fares ; Air travel ; Airlines ; Consumer behavior ; Consumer behaviour ; Consumer prices ; Consumers ; Cost control ; Customer relations ; Customer relationship management ; Demand shocks ; econometrics ; Economic expectations ; Internet ; Inventory ; Leisure ; Management science ; Market prices ; Marketing ; Methods ; Operations management ; Prices ; Pricing ; Pricing policies ; Pricing strategies ; Revenue ; Revenue management ; strategic customer behavior ; Strategic planning (Business) ; structural estimation ; Studies ; Transport ; Travel ; Travel industry
É parte de: Management science, 2014-09, Vol.60 (9), p.2114-2137
Notas: ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
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Descrição: Consumers often consider delaying a purchase strategically, anticipating that prices might decrease. Combining two unique data sources from the air-travel industry (posted fare data and booking data), we use a structural model to estimate the fraction of strategic consumers in the population, assuming different levels of sophistication in consumers' perception of future prices: perfect foresight and weak- and strong-form rational expectations. We find that 5.2% to 19.2% of the population is strategic across markets, measured by the first and third quartiles. Our intermarket analysis indicates that shorter trips with more attractive outside options are populated with more strategic consumers. Using a nonparametric approach, we further find that most strategic consumers arrive either at the beginning of the booking horizon or close to departure. Finally, our counterfactual analysis shows that, contrary to conventional wisdom, the presence of strategic consumers does not necessarily hurt revenues. Rather, the impact varies by market. Commitment to a nondecreasing pricing strategy is more likely to benefit business markets than leisure markets, or it could even hurt leisure markets. Intermarket analysis shows that city pairs with lower Internet penetration, higher average price, and shorter distances tend to benefit more from such commitment as well. This paper was accepted by Yossi Aviv, operations management .
Editor: Linthicum: INFORMS
Idioma: Inglês

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Are Consumers Strategic? Structural Estimation from the Air-Travel Industry

Li, Jun ; Granados, Nelson ; Netessine, Serguei

Linthicum: INFORMS

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