A Nested Logit-Based Approach to Measuring Air Shopping Screen Quality and Predicting Market Share

Journal of Revenue and Pricing Management, Vol 8, 2/3, 134-147, 2008

15 Pages Posted: 12 Oct 2014

See all articles by Hai Jiang

Hai Jiang

Tsinghua University - Department of Industrial Engineering; Tsinghua University

Date Written: September 1, 2008

Abstract

Understanding the relationship between itineraries displayed on an air travel website’s shopping screens and the website’s market share has never been so important nowadays. This paper presents an approach to measure ‘screen quality’, that is, the overall desirability of itineraries displayed by a website. At the centre of this approach is a nested logit model that generates a screen quality metric called ‘selection probability’ by comparing the screens of the host website to those of a reference website. This metric measures the probability an individual would select an itinerary on the host website. Recognising the fact that there are unobserved factors across websites that influence shopping behaviour, we introduce website-specific constants to capture the average of those effects, which directly translates our ‘selection probability’ to market share prediction. We present three models and conduct experiments to evaluate their performance. Results show that the model using shopping, booking and screen data simultaneously in calibration generates satisfactory prediction results.

Keywords: discrete choice analysis, nested logit, online travel, screen quality, market share

Suggested Citation

Jiang, Hai, A Nested Logit-Based Approach to Measuring Air Shopping Screen Quality and Predicting Market Share (September 1, 2008). Journal of Revenue and Pricing Management, Vol 8, 2/3, 134-147, 2008, Available at SSRN: https://ssrn.com/abstract=2508521

Hai Jiang (Contact Author)

Tsinghua University - Department of Industrial Engineering ( email )

Beijing, 100084
China

Tsinghua University ( email )

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