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A demand‐based model for the advance and spot pricing of services
| Content Provider | Semantic Scholar |
|---|---|
| Author | Ng, Irene C. L. |
| Copyright Year | 2009 |
| Abstract | Purpose – The purpose of this paper is to study the non‐consumption of a service by advance buyers, the re‐selling of relinquished capacity at spot time and the effect on the pricing of advance and spot demand of services.Design/methodology/approach – The paper employs mathematical economics modeling technique.Findings – The model shows that advance prices are always lower than spot prices due to the non‐consumption effect and also that providing a refund to advance buyers, as insurance against non‐consumption, may be. By modeling in the capacity of the firm, the paper also presents the firm's capacity conditions when the firm does not sell in advance and also when market failure occurs i.e. when the firm does not sell in advance nor at consumption time.Research limitations/implications – The model does not consider uncertainty in the spot price and assumes a one‐stage optimization. Furthermore, the model extension with refund is numerically derived.Practical implications – This model informs industry on ... |
| Starting Page | 517 |
| Ending Page | 528 |
| Page Count | 12 |
| File Format | PDF HTM / HTML |
| DOI | 10.1108/10610420910998244 |
| Alternate Webpage(s) | https://ore.exeter.ac.uk/repository/bitstream/handle/10036/48237/advancedpricing.pdf?isAllowed=y&sequence=1 |
| Alternate Webpage(s) | https://doi.org/10.1108/10610420910998244 |
| Volume Number | 18 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
