Organizational Structure and Pricing: Evidence from a Large U.S. Airline

IF 11.1 1区 经济学 Q1 ECONOMICS
Ali Hortaçsu, Olivia R Natan, Hayden Parsley, Timothy Schwieg, Kevin R Williams
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引用次数: 0

Abstract

Firms facing complex objectives often decompose the problems they face, delegating different parts of the decision to distinct subunits. Using comprehensive data and internal models from a large U.S. airline, we establish that airline pricing is not well approximated by a model of the firm as a unitary decision-maker. We show that observed prices, however, can be rationalized by accounting for organizational structure and for the decisions by departments that are tasked with supplying inputs to the observed pricing heuristic. Simulating the prices the firm would charge if it were a rational, unitary decision-maker results in lower welfare than we estimate under observed practices. Finally, we discuss why counterfactual estimates of welfare and market power may be biased if prices are set through decomposition, but we instead assume that they are set by unitary decision-makers.

Abstract Image

组织结构和定价:来自美国一家大型航空公司的证据
面对复杂目标的公司经常分解他们所面临的问题,将决策的不同部分委派给不同的子单元。利用美国一家大型航空公司的综合数据和内部模型,我们确定航空公司定价不能很好地近似于公司作为单一决策者的模型。然而,我们表明,观察到的价格可以通过考虑组织结构和负责向观察到的定价启发式提供输入的部门的决策来合理化。如果企业是一个理性的、单一的决策者,那么对其定价的模拟结果将比我们在观察到的实践下估计的要低。最后,我们讨论了为什么如果价格是通过分解设定的,那么对福利和市场力量的反事实估计可能会有偏差,但我们假设它们是由单一决策者设定的。
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来源期刊
CiteScore
24.20
自引率
2.20%
发文量
42
期刊介绍: The Quarterly Journal of Economics stands as the oldest professional journal of economics in the English language. Published under the editorial guidance of Harvard University's Department of Economics, it comprehensively covers all aspects of the field. Esteemed by professional and academic economists as well as students worldwide, QJE holds unparalleled value in the economic discourse.
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