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Demand-shock characteristics and pricing behavior: A natural experiment from UEFA Euro 2016

Author

Listed:
  • Piga, Claudio A.
  • Gaggero, Alberto A.
  • Alderighi, Marco

Abstract

We consider a multi-period, limited capacity, unsegmented airline pricing model whose solution returns a sequence of increasing prices based on the order of sale. We show that a positive demand shock corresponding to an increase in the arrival rate reduces within-period price dispersion and has a minor impact on the sequence’s maximum prices. Alternatively, upward shifts in customers’ willingness-to-pay lead to higher maximum prices but do not affect within-period price dispersion. Demand shocks are identified in our sample by the draw that created the stage groups for the UEFA Euro 2016 soccer tournament. After the draw, some flights became suitable to transport foreign supporters to the location where matches were scheduled. Consistent with the theory, a different price behavior is observed between UK and continental European routes.

Suggested Citation

  • Piga, Claudio A. & Gaggero, Alberto A. & Alderighi, Marco, 2025. "Demand-shock characteristics and pricing behavior: A natural experiment from UEFA Euro 2016," Economics of Transportation, Elsevier, vol. 41(C).
    • Handle: RePEc:eee:ecotra:v:41:y:2025:i:c:s2212012225000012
    DOI: 10.1016/j.ecotra.2025.100393
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    More about this item

    Keywords

    Airline; Demand shock; Dynamic pricing; Soccer tournament; UEFA;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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