Price dispersion in a market with advance-purchases

This paper examines price discrimination in a market where consumers learn their preferences over time. The products are perfect substitutesex ante, but there is horizontal differentiationex post. Air travel provides one example of such a market. In equilibrium, there is more price discrimination under duopoly than under monopoly, which is consistent with recent empirical evidence from the U.S. airline industry.I am grateful to Tom Holmes for many discussions on related topics.