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
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