How airlines price flights

This video clip looks at the pricing of seats on the route from New York to Los Angeles, highlighting the various factors that help determine the price of your ticket between the two destinations.

It looks at some classic oligopoly pricing, the impact of predatory pricing, the issue of price discrimination and price differentiation, noting the clever way that airlines use different fare buckets to price seats, and the use of minimum stay requirements, exploiting different elasticities of demand. It is fantastic stuff.