Economics Asked by sujithDas on July 3, 2021
Objective – I am building a dynamic pricing tool for airline tickets which will consider the competitor prices. Taking competitor price as reference, this tool will price the ticket. Also instead of price simultaneously need to follow the lead player in the market and price the ticket.
In the research found out two models
- Bertrand Model 2) Stackelberg Model
As per my knowledge Bertrand model is competing on prices and stackelberg competing with quantities.
As airline is a industry which has capacity constraints (i.e can’t compete on quantities), I have mainly two queries related to stackelberg model
1). can I use stackelberg(leader-follower) model/concept,
if need to compete with prices instead of quantities.2). Can stackelberg be used with multiple leaders (more than 2) ?
3). Or Is there any combination of both models for example something called
bertrand-stackelberg
Can anyone help with insights. Thanks in advance
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