Related papers: Common Subcontracting and Airline Prices
We present empirical evidence on the relationship between demand shocks and price changes, conditional on returns to scale. We find that in industries with decreasing returns to scale, demand increases (which raise costs) correspond to…
We explore heterogeneous prices as a source of heterogeneous or stochastic demand. Heterogeneous prices could arise either because there is actual price variation among consumers or because consumers (mis)perceive prices differently. Our…
Labor displacement off-or nearshore is a performance improvement instrument that currently sparks a lot of interest in the service sector. This article proposes a model to understand the consequences of such a decision on management…
We analyze the global structure of the world-wide air transportation network, a critical infrastructure with an enormous impact on local, national, and international economies. We find that the world-wide air transportation network is a…
Route choice models in public transport have been discussed for a long time. The main factor why a passenger chooses a specific path is usually based on its length or travel time. However, also the ticket price that passengers have to pay…
We introduce a dynamic percolation model aimed at describing the consumption, and eventual exhaustion, of resources in transportation networks. In the model, rational agents progressively consume the edges of a network along demanded…
Fare planning is one among several steps in public transport planning. Fares are relevant for the covering of costs of the public transport operator, but also affect the ridership and the passenger satisfaction. A fare structure is the…
We propose a pseudo-market solution to resource allocation problems subject to constraints. Our treatment of constraints is general: including bihierarchical constraints due to considerations of diversity in school choice, or scheduling in…
Technological developments worldwide are contributing to the improvement of transport infrastructures and they are helping to reduce the overall transport costs. At the same time, such developments along with the reduction in transport…
The marginal price of electricity traditionally depends on the dual variables associated with relevant optimization goals. Particularly, in the optimal power flow realm, prices represent the cost of supplying an additional unit of power at…
This article presents a model for the economic value of extra capacity at an airport. The model is based on a series of functional relationships linking the benefits of extra capacity and the associated costs. It takes into account the cost…
According to common understanding, in free completion of a private product, market and price, the two main factors in the competition that leads to economic efficiency, always exist together. This paper, however, points out the phenomenon…
Ancillaries have become a major source of revenue and profitability in the travel industry. Yet, conventional pricing strategies are based on business rules that are poorly optimized and do not respond to changing market conditions. This…
A commonly expressed concern about the rise of the peer-to-peer rental market Airbnb is that hosts---those renting out their properties---impose costs on their unwitting neighbors. I consider the question of whether apartment building…
Transportation agencies across the United States have the responsibility of providing transportation services for all travelers. Paratransit services which are designed to meet the needs of disabled travelers have been available to a…
Consumers only discover at the first seller which product best fits their needs, then check its price online, then decide on buying. Switching sellers is costly. Equilibrium prices fall in the switching cost, eventually to the monopoly…
Changes in air transport networks over time may be induced by competition among carriers, changes in regulations on airline industry, and socioeconomic events such as terrorist attacks and epidemic outbreaks. Such network changes may…
Many important economic outcomes result from the combined effects of several choices, so the best option is not determined from each choice in isolation, but depends on how each choice alters total outcomes. We formally show that narrow…
We consider a simple two-player game involving a large incumbent and small entrant into a cellular wireless access provider marketplace. The entrant's customers must pay roaming charges. We assume that the roaming charges are regulated,…
This paper models firm-to-firm trade in a production network as a set of double auctions. Firms have multilateral market power, namely, can affect prices in both input and output markets. The size and division of surplus are endogenous and…