Managerial Economics: Applications, Strategy and Tactics 12th Edition by James McGuigan, Charles Moyer, Frederick Harris

Exercise 10

Suppose the frequent-flyer program raised the cost of high-yield spill twofold because business customers who are denied boarding now take their business to other carriers for several future trips, not just the current one. Reanalyze the overbooking decision in Figure under these circumstances. Will overbooking of business-class service increase or decrease
Figure How the Overbooking Decision Minimizes the Summed Cost of Spoilage and Spill