IDEAS home Printed from https://ideas.repec.org/a/taf/ijecbs/v15y2008i1p1-25.html
   My bibliography  Save this article

Price Discrimination and the Cruise Line Industry: Implications for Market Definition, Competition, and Consumer Welfare

Author

Listed:
  • James Langenfeld
  • Wenqing Li

Abstract

This article extends the price discrimination literature and applies it to market definition and competitive effects analysis in recent mergers in the cruise line industry. In that industry, short run output is fixed. If firms want to increase price and restrict output to price-insensitive customers, they have to increase the output and lower price to the price-sensitive customers. We show that with fixed output (1) it is in firms' interest to engage in price discrimination, (2) firms have increased ability to engage profitably in price discrimination as the intensity of competition decreases, and (3) the average price of price-sensitive and -insensitive consumers increase with reduced competition. Unlike the economists at the Federal Trade Commission, our analysis suggests that cruise lines engage in third-degree price discrimination. Moreover, the cruise industry could be a separate market and a reduction in the number of competitors might raise average prices.

Suggested Citation

  • James Langenfeld & Wenqing Li, 2008. "Price Discrimination and the Cruise Line Industry: Implications for Market Definition, Competition, and Consumer Welfare," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 15(1), pages 1-25.
    • Handle: RePEc:taf:ijecbs:v:15:y:2008:i:1:p:1-25
    DOI: 10.1080/13571510701830440
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/10.1080/13571510701830440
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13571510701830440?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Josep Mª Espinet Rius, 2018. "Global and local pricing strategies in the cruise industry," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 17(5), pages 329-340, October.
    2. Meng-Ying Wang & Li-Chen Chou, 2024. "Evaluating information asymmetry effects on hotel pricing: a comparative analysis before and during the COVID-19 pandemic in the Taiwan’s market," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.
    3. Woo Gon Kim & Meehee Cho & Daekwan Kim & Geon-Cheol Shin, 2014. "The Effect of Price Dispersion on hOtel Performance," Tourism Economics, , vol. 20(6), pages 1159-1179, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ijecbs:v:15:y:2008:i:1:p:1-25. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CIJB20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.