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Question: Airlines routinely overbook flights, selling more tickets than seats available. If too many ticketed passengers show up, they offer payments to volunteers who are willing to give up their seats. These take such forms as cash vouchers for future flights and upgrades to first class on the next flight out.
a. Why is this situation more efficient than a simple rule that prohibits airlines from overbooking? (Be sure to say precisely what you mean by efficiency.)
b. Why do you (probably) not object to the airline practice of bribing passengers off the plane, but you (probably) would object if you learned that the airline had bribed a local politician to obtain airport gate space that would otherwise have been used by a competitor?
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