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Online Supplement Appendix A -Proofs for Sections 3 and 4.1
 

Summary: Online Supplement
Appendix A - Proofs for Sections 3 and 4.1
Proof of Proposition 1: Let ÁR1 and ÁR2 denote the mean reservation prices for customers
who are in the target and non-target segments of the regular product, respectively. Similarly,
define ÁP1 and ÁP2 to be the mean reservation prices for customers who are in the target
and non-target segments of the promotional product, respectively. Then, we have
E(X) = qR1ÁR1 + qR2ÁR2
and
E(Y ) = qP1ÁP1 + qP2ÁP2.
We also have
E(XY ) = qR1

0

0
xyfR1(x)(11fP1(y) + 12fP2(y))dxdy
+ qR2

0

  

Source: Aydin, Goker - Department of Operations and Decision Technologies, Indiana University Bloomington

 

Collections: Engineering