| Author: | Lee, K.S. Ng, I.C.L. |
| Title: | Advanced sale of service capacities: A theoretical analysis of the impact of price sensitivity on pricing and capacity allocations |
| Journal: | Journal of Business Research
2001 : DEC, VOL. 54:3, p. 219-225 |
| Index terms: | Service Pricing Capacity Policy Contracts Marketing Models |
| Language: | eng |
| Abstract: | Should service firms sell in advance? Using a theoretical approach, the optimality of advanced sale of capacity for a monopolistic service firm is studied and the impact of market price sensitivity on the optimal price and capacity allocation for advanced sales are examined. It is shown that when firms undertake advanced sale, capacity utilization and profits are higher even though prices for sale in advance are discounted. In addition, it is shown that optimal pricing and capacity allocations for advanced sale depend on the expected price sensitivity at the time of consumption. |
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