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Advanced sales and competition in a service industry

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  • Miquel Carreras-Simó

Abstract

This paper analyses the relationship between a firms' interest in advance sales and the competition intensity in the market when consumers adopt a strategic behaviour in purchasing. We demonstrate how firms in a more competitive market have more incentives to offer advance sales. When a firm increases their advanced sales, the profits of last-minute sales go down; therefore, a firm will aim to sell in advance until the expected profit on the margin for advanced sales equals the marginal profit lost for last-minute sales. When competition goes up, the marginal profit lost at last-minute market for increase advanced sales goes down, so it is in the firms' best interest to increase advanced sales and to decrease last-minute sales. Therefore, competition encourages advanced sales.

Suggested Citation

  • Miquel Carreras-Simó, 2016. "Advanced sales and competition in a service industry," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 9(1), pages 1-16.
    • Handle: RePEc:ids:ijrevm:v:9:y:2016:i:1:p:1-16
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    References listed on IDEAS

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    Cited by:

    1. Joan Carles Cirer-Costa, 2022. "Qualitative revenue management in sun-and-beach hotels," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(4), pages 462-469, August.

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