Dynamic Pricing Model for Airline Revenue Management under Competition

This article develops a continuous-time dynamic pricing model for two competitive flights with stochastic control theory and game theory. Two price levels are taken into account for each flight. The condition of the equilibrium solution is derived. Solutions and corresponding properties are discussed. Numerical experiments are also presented to describe the application of the model in real world, the priority of the equilibrium strategy and the other two strategies. The equilibrium strategy is proved to be better than the other two.