Revenue Management Technical Academy Blog

RM Moment #6:

RM is an economic anomaly (or exception), because many businesses with inflexible production and high financial leverage (aviation, hotels, rent-a-car, etc...) even operating in an environment of strong competition (perfect competition), the prices/marginal revenue practiced are far or very far from being equal to their marginal cost, thus contradicting the economic principles of perfect or quasi-perfect competition. In this sense, the economic paradox that exists in companies capable of applying RM is that they tend to operate in market structures of strong competition (perfect or quasi-perfect competition), but applying, in practice, many economic principles typical of monopolies (e.g. price differentiation) and/or oligopolies (e.g. product differentiation).

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