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Reputation, search cost, and airfares

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  • Bilotkach, Volodymyr

Abstract

As cost of search for consumers decreases with the spread of the internet; researchers question whether this trend will lead to lower price or higher product differentiation. This paper examines a sample of offered fares to see if an airline choosing not to distribute its tickets via a channel where competitors' offers are directly observable may attempt taking advantage of potential customers. We find this to be the case. Our study suggests that the US airline industry appears to be evolving toward more product differentiation in the internet age.

Suggested Citation

  • Bilotkach, Volodymyr, 2010. "Reputation, search cost, and airfares," Journal of Air Transport Management, Elsevier, vol. 16(5), pages 251-257.
    • Handle: RePEc:eee:jaitra:v:16:y:2010:i:5:p:251-257
    DOI: 10.1016/j.jairtraman.2010.01.002
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    References listed on IDEAS

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    1. Karen Clay & Ramayya Krishnan & Eric Wolff & Danny Fernandes, 2002. "Retail Strategies on the Web: Price and Non–price Competition in the Online Book Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 351-367, September.
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    5. Clay, Karen, et al, 2002. "Retail Strategies on the Web: Price and Non-price Competition in the Online Book Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 351-367, September.
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    Cited by:

    1. Jost Daft & Sascha Albers & Sebastian Stabenow, 2021. "From product-oriented flight providers to customer-centric retailers: a dynamic offering framework and implementation guidelines for airlines," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(6), pages 615-625, December.
    2. Dudás, Gábor & Boros, Lajos & Pál, Viktor & Pernyész, Péter, 2016. "Analysis of the lowest airfares considering the different business models of airlines, the case of Budapest," MPRA Paper 74502, University Library of Munich, Germany.
    3. Volodymyr Bilotkach & Nicholas G. Rupp & Vivek Pai, 2013. "Value of a Platform to a Seller: Case of American Airlines and Online Travel Agencies," Working Papers 13-08, NET Institute.
    4. Adler, Nicole & Gellman, Aaron, 2012. "Strategies for managing risk in a changing aviation environment," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 24-35.
    5. Christopher P. Holland & Julia A. Jacobs & Stefan Klein, 2016. "The role and impact of comparison websites on the consumer search process in the US and German airline markets," Information Technology & Tourism, Springer, vol. 16(1), pages 127-148, March.

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