Dr. Guillaume Yon
c:o/re Junior Fellow 09/23 – 08/24
I am a sociologist of science and technology, and the goal of my research is to throw new light on aspects of these that shape today’s world. I am particularly interested in technical/economic systems. I have done research in the past on electricity pricing. The pricing structure is a core component of the complex system of power generation, transmission and distribution, and I traced the emergence of such a structure in France in the 1950s and 1960s. I am currently researching airline ticket pricing. Prior to joining the KHK c:o/re in Aachen, I held postdoctoral positions at the Max Planck Institute for the History of Science in Berlin, the London School of Economics, and the Center for the History of Political Economy at Duke University. I earned my PhD in sociology of science in 2016 from the École des mines, and studied economics, sociology and modern history at the École normale supérieure Paris-Saclay.
The Rise of Marketplace Engineering
When shopping for flights online, say, with Google Flights, almost immediately after logging a request, we get a display of prices and itineraries from various airlines. This display is the outcome of an intricate set of systems. One of these systems is the airline’s own revenue management system. At its core, a revenue management system is an opportunity cost calculator, deciding, based on booking forecasts for each flight, whether to reject some early bookings at a low fare to protect seats for later bookings at a higher fare, in order to maximize revenue. Since airlines operate on tight margins, the difference between a good and a bad revenue management system is also the difference between profitability and bankruptcy. Therefore, since their emergence in the early 1980s in the United States, revenue management systems have been an object of intense scientific and technological research, in probability and statistics, mathematical optimization, and more recently econometrics and machine learning, in order to automate, at industrial scale, the microeconomics of price discrimination. Based on extensive interviews with those who design revenue management systems, I research their emergence and evolution in the airline industry from the 1980s up to today. Revenue management systems are shaped by scientific advances in forecasting and optimization, as well as by changing business strategies and market circumstances. The evolution of revenue management has also a lot to do with the kind of data airlines are able and unable to capture, and the limits of the computing technologies available. Most importantly, revenue management systems are both enabled and constrained by distribution. Airlines revenue management systems need to connect with the few existing global distribution systems that reach airlines’ customers all over the world through a myriad of travel agents (online, corporate or brick-and-mortar) in real time. What in the 1980s was one of the first global electronic commerce infrastructure is also a fiercely contested, technologically intricate, and rapidly changing field.
Yon, Guillaume. 2023. A History of Revenue Management and Pricing. In INFORMS. https://www.informs.org/Explore/History-of-O.R.-Excellence/O.R.-Methodologies/Revenue-Management
Yon, Guillaume. 2020. Building a National Machine: The Pricing of Electricity in Postwar France. In History of Political Economy, 52(S1): 245-269. https://doi.org/10.1215/00182702-8718035