This paper uses an original panel dataset with posted prices and sales to estimate a dynamic demand. We find that consumers become more price sensitive as time to departure nears which is consistent with having lower valuations. This result provides empirical support to a key theoretical implication in Deneckere and Peck (2012)—high-valuation consumers purchase earlier. We also find that the number of active consumers increases closer to departure.
• We use an original dataset with posted prices and sales to estimate a dynamic demand.
• The estimates are consistent with agents forming expectations.
• We find that high-valuation consumers purchase earlier.
• The results show that the number of active consumers increases closer to departure.
Escobari, Diego. "Estimating dynamic demand for airlines." Economics Letters 124.1 (2014): 26-29. https://doi.org/10.1016/j.econlet.2014.04.012
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Original published version available at https://doi.org/10.1016/j.econlet.2014.04.012