Skip to main content
Discussion Paper

Organizational Structure and Pricing: Evidence from a Large U.S. Airline

Although typically modeled as a centralized firm decision, pricing often involves
multiple organizational teams that have decision rights over specific pricing inputs.
We study team input decisions using comprehensive data from a large U.S. airline.
We document that pricing at a sophisticated firm is subject to miscoordination across
teams, uses persistently biased forecasts, and does not account for cross-price elasticities.
With structural demand estimates derived from sales and search data, we find