This paper studies the relationship between demand uncertainty — the key source of excess capacity — and capacity utilization in the U.S. airline industry. We present a simple theoretical model that predicts that lower demand realizations are associated with higher demand volatility. This...

Traffic forecasts provide essential input for the appraisal of transport investment projects. However, according to recent empirical evidence, long-term predictions are subject to high levels of uncertainty. This paper quantifies uncertainty in traffic forecasts for the tolled motorway network...

Firms mitigate uncertainty in demand and supply by carrying safety stock, planning for excess capacity and diversifying supply sources. In this study, we provide a framework to jointly optimize these three levers in a periodic review infinite horizon setting, and in particular we examine how one...

This paper shows that, with pre-set price and capital decisions of firms facing uncertainty and credit rationing, price, mark up and the expected degree of capacity utilization (resp. capital) increases (resp. decreases) with the firm internal net worth