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It's nontrivial because the price discrimination isn't perfect, and the paper looks at a number of secondary considerations (most notably the assumption that pr
by notahacker 5y ago
It's nontrivial because the price discrimination isn't perfect, and the paper looks at a number of secondary considerations (most notably the assumption that pricing dynamicalkly purely based on how far in advance bookings are made captures the difference between a class of business travellers who prefer a situation in which they have to pay even higher prices to ensure seats are available with a day or two's notice, and leisure travellers whose flexibility around travel dates means they care more about price than availability of the lowest price tickets)
I do agree that it's unremarkable that price discrimination results in higher total welfare than uniform prices though, and all the other conclusions are completely in line with expectations. Its also the case that the airline's own price discrimination models will be more sophisticated with access to better (commercially sensitive) data than this stylised version