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The effects of competition on price dispersion in the airline industry: a panel analysis Author info | Abstract | Publisher info | Download info | Related research | Statistics Kris Gerardi
Adam Hale Shapiro
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This paper analyzes the effects of market structure on price dispersion in the airline industry, using panel data from 1993 through 2006. The results found in this paper contrast with those of Borenstein and Rose (1994), who found that price dispersion increases with competition. We find that competition has a negative effect on price dispersion, in line with the textbook treatment of price discrimination. Specifically, the effects of competition on price dispersion are most significant on routes that we identify as having consumers characterized by relatively heterogeneous elasticities of demand. On routes with a more homogenous customer base, the effects of competition on price discrimination are largely insignificant. We conclude from these results that competition acts to erode the ability of a carrier to price discriminate, resulting in reduced overall price dispersion.
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Paper provided by Federal Reserve Bank of Boston in its series Working Papers with number
07-7.
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Date of creation: 2007Date of revision:
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Keywords: Airlines ; Price discrimination ; This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Brueckner, Jan K. & Spiller, Pablo T., 1991.
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Ron Borzekowski & Raphael Thomadsen & Charles Taragin, 2009.
"Competition and price discrimination in the market for mailing lists ,"
Quantitative Marketing and Economics ,
Springer, vol. 7(2), pages 147-179, June.
[Downloadable!] (restricted)
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