We introduce and analyze an inter-temporal choice model where customer valuations are uncertain and evolve over time. The model leads directly to the study of call options on capacity that are similar to partially refundable fares. We show that the capacity provider earns significantly higher...

Capacity providers often experience a mismatch between supply and demand that can be partially alleviated while improving revenues by allowing for product upgrades. When prices are fixed and demands are independent, the problem is to decide which customer demands to upgrade to which products and...