Airline Market Power and Intertemporal Price Dispersion
AbstractThis paper analyzes the empirical relationship between market structure and price dispersion in the airline markets connecting the UK and the Republic of Ireland. Price dispersion is measured by a number of inequality indexes, calculated using fares posted on the Internet at specific days before takeoff. We find a negative correlation between market dominance and price dispersion; thus competition appears to hinder the airlines' ability to price discriminate to exploit consumers' heterogeneity in booking time preferences. Moreover, in the Christmas and Easter periods of high demand, fares are less dispersed, possibly because airlines target a less heterogenous set of consumers.
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Bibliographic InfoPaper provided by Department of Economics, Loughborough University in its series Discussion Paper Series with number 2009_10.
Date of creation: Jul 2009
Date of revision: Jul 2009
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Postal: Loughborough, Leicestershire, LE11 3TU
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Web page: http://www.lboro.ac.uk/departments/sbe/research/economics/index.html
More information through EDIRC
Intertemporal pricing; competition; price dispersion.;
Other versions of this item:
- Alberto A. Gaggero & Claudio A. Piga, 2011. "Airline Market Power and Intertemporal Price Dispersion," Journal of Industrial Economics, Wiley Blackwell, vol. 59(4), pages 552-577, December.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-08-22 (All new papers)
- NEP-COM-2009-08-22 (Industrial Competition)
- NEP-MKT-2009-08-22 (Marketing)
- NEP-TUR-2009-08-22 (Tourism Economics)
- NEP-URE-2009-08-22 (Urban & Real Estate Economics)
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