Airlines routinely sell more tickets for flights than the number of seats on the plane. Overbooking seldom

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Airlines routinely sell more tickets for flights than the number of seats on the plane. “Overbooking” seldom causes problems because a statistically predictable number of ticketholders fail to show up for flights. In contrast, each retailer of hearing aids typically has the capacity to sell many more hearing aids per week than it actually sells. “Excess capacity” is routine for retailers of hearing aids. Contrast the effects of overbooking and excess capacity on profits lost by the seller when the buyer breaches a contract to buy.

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Law and economics

ISBN: 978-0132540650

6th Edition

Authors: Robert cooter, Thomas ulen

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