RESERVATIONS, REFUNDS, AND PRICE COMPETITION

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http://hdl.handle.net/10138/135767
Title: RESERVATIONS, REFUNDS, AND PRICE COMPETITION
Author: Ringbom, Staffan; Shy, Oz
Belongs to series: 5
ISBN: 951-555-794-1
Abstract: We analyze the incentives of service providers to utilize advance reservation systems allowing for refunds in an imperfectly competitive service industry with price competition. We investigate how the refund option affects equilibrium prices, and characterize the conditions under which the refund option is utilized. In contrast to the monopoly models where a single provider can capture a higher share of consumer surplus by utilizing the refundability option, competition reduces this surplus. Thus under price competition the nonrefundable booking strategy maximizes industry profit.
URI: http://hdl.handle.net/10138/135767
Date: 2003-10-15
Subject (ysa): advance booking
reservation systems
refunds
imperfect competition


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