Value uncertain in advance selling: The impact of offering refunds for cancellations

With recent development in technologies such as electronic tickets, smart cards, advance selling and inter-temporal pricing now make it appropriate for nearly all services. For example, the advance selling and inter-temporal pricing strategy of airlines have increasingly received attention from both practitioners and researchers. Essentially, advance selling can improve profits when buyers are uncertain about their future valuations of a service. An inter-temporal pricing model with service cancellation is established through incorporating customer value uncertain and service cancellation. The results illustrate that value uncertain and service cancellation affect the optimal inter-temporal pricing strategy, and the seller can profit from refund for service cancellation under certain condition.