Do Prices grow more in Euroland? Evidence from the Airline Industry
AbstractUsing more than 10 million on-line fares, we study the determinants of yearly fares’ changes in June 2002-June 2005. We verify whether airlines took advantage, after the Euro introduction, of potential inflationary pressures by increasing their fares more in routes to Eurozone nations. The evidence suggests that this was the case only for the period end 2003-end 2004. To control for other factors that may affect fares’ setting decisions, we provide insights into the effects of the takeovers of Go Fly and Buzz by EasyJet and Ryan Air, respectively. Although we generally find that fares offered immediately after the takeover by the acquiring firms were lower than the ones charged by the target firms twelve months earlier, in one case the effects of the takeover on consumers’ welfare are ambiguous.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, Loughborough University in its series Discussion Paper Series with number 2006_8.
Date of creation: Mar 2006
Date of revision: Nov 2006
Contact details of provider:
Postal: Loughborough, Leicestershire, LE11 3TU
Phone: +44 (0) 1509 222701
Fax: +44 (0) 1509 223910
Web page: http://www.lboro.ac.uk/departments/sbe/research/economics/index.html
More information through EDIRC
Price discrimination; takeovers; Euro; changeover; low cost carriers; liberalisation.;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-08 (All new papers)
- NEP-CBA-2006-04-08 (Central Banking)
- NEP-COM-2006-04-08 (Industrial Competition)
- NEP-CSE-2006-04-08 (Economics of Strategic Management)
- NEP-EEC-2006-04-08 (European Economics)
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.:
- Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521016919.
- Michael R. Baye & J. Rupert J. Gatti & Paul Kattuman & John Morgan, 2005.
"Did the Euro Foster Online Price Competition? Evidence from an International Price Comparison Site,"
Working Papers, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy
2005-09, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
- Michael R. Baye & J. Rupert J. Gatti & Paul Kattuman & John Morgan, 2006. "Did the Euro Foster Online Price Competition? Evidence from an International Price Comparison Site," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 44(2), pages 265-279, April.
- Oaxaca, Ronald L. & Geisler, Iris, 2003. "Fixed effects models with time invariant variables: a theoretical note," Economics Letters, Elsevier, Elsevier, vol. 80(3), pages 373-377, September.
- Polachek, Solomon W. & Kim, Moon-Kak, 1994. "Panel estimates of the gender earnings gap : Individual-specific intercept and individual-specific slope models," Journal of Econometrics, Elsevier, Elsevier, vol. 61(1), pages 23-42, March.
- Evans, William N & Kessides, Ioannis N, 1993. "Localized Market Power in the U.S. Airline Industry," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 66-75, February.
- Severin Borenstein & Nancy L. Rose, 1991.
"Competition and Price Dispersion in the U.S. Airline Industry,"
NBER Working Papers
3785, National Bureau of Economic Research, Inc.
- Borenstein, Severin & Rose, Nancy L, 1994. "Competition and Price Dispersion in the U.S. Airline Industry," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(4), pages 653-83, August.
- Maria J. Gil-Molto & Claudio A. Piga, 2005.
"Entry and Exit in a Liberalised Market,"
Discussion Paper Series, Department of Economics, Loughborough University
2005_10, Department of Economics, Loughborough University, revised May 2006.
- Glenn Ellison & Sara Fisher Ellison, 2005. "Lessons About Markets from the Internet," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 19(2), pages 139-158, Spring.
- Kathy J. Hayes & Leola B. Ross, 1998. "Is Airline Price Dispersion the Result of Careful Planning or Competitive Forces?," Review of Industrial Organization, Springer, Springer, vol. 13(5), pages 523-541, October.
- Giaume, Stephanie & Guillou, Sarah, 2004. "Price discrimination and concentration in European airline markets," Journal of Air Transport Management, Elsevier, Elsevier, vol. 10(5), pages 305-310.
- Charles Boguslaski & Harumi Ito & Darin Lee, 2004. "Entry Patterns in the Southwest Airlines Route System," Review of Industrial Organization, Springer, Springer, vol. 25(3), pages 317-350, 08.
- Joskow, Andrew S. & Werden, Gregory J. & Johnson, Richard L., 1994.
"Entry, exit, and performance in airline markets,"
International Journal of Industrial Organization, Elsevier,
Elsevier, vol. 12(4), pages 457-471, December.
- Joskow, A.S. & Werden, G.J. & Johnson, R.L., 1990. "Entry, Exit, And Performance In Airline Market," Papers, U.S. Department of Justice - Antitrust Division 90-10, U.S. Department of Justice - Antitrust Division.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Huw Edwards).
If references are entirely missing, you can add them using this form.