%0 Journal Article
%T A Model of Room Rentals in a Seasonal Hotel Illustrating Monopolistic Competition
%A Gerald Aranoff
%J Theoretical Economics Letters
%P 139-145
%@ 2162-2086
%D 2014
%I Scientific Research Publishing
%R 10.4236/tel.2014.42021
%X <p style=\"text-align:justify;\">
	We illustrate
monopolistic competition with an original model of hotel rooms for daily rental
that has peak and off-peak demand periods. There are two types of hotels, hotelK and hotelL, each having linear total
costs with absolute capacity limits. HotelsK are static efficient since they operate with low MC. They are open year-around
and always at full capacity. HotelsL are output flexible since they operate with low FC. They open only in the peak-demand
periods. We show, under conditions of the model, that the added cost to supply
irregular demand should be small because of hotelsL low FC. We show, under the conditions of the model,
that the added gain in consumer surplus in increasing the irregularity should
be large because consumers will be switching some consumption from off-peak to
peak periods.
</p>
%K Monopolist Competition
%K Demand Fluctuations
%K Marginal Cost Pricing
%K Consumer Surplus
%K Cost Curve
%U http://www.scirp.org/journal/PaperInformation.aspx?PaperID=43525