Refundability and Price: Empirical Analysis on the Airline Industry
AbstractThis paper provides new evidence on price dispersion in the US airline industry. Using the observed fare differences between refundable and non-refundable tickets, we first document evidence on the prices passengers pay for a refund option. We find that the factors related to the value of refund option and customers¡¯ individual demand uncertainty have a significant effect on the relative refund fares. This finding is robust for various market structures. Further, taking into account the variations of the relative refund fares, we investigate the effects of market structure on price dispersion.
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Bibliographic InfoPaper provided by Research Institute for Market Economy, Sogang University in its series Working Papers with number 1107.
Length: 34 pages
Date of creation: 2011
Date of revision:
Price discrimination; Refundability; Competition; Airline industry;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- 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-2011-11-28 (All new papers)
- NEP-COM-2011-11-28 (Industrial Competition)
- NEP-MKT-2011-11-28 (Marketing)
- NEP-URE-2011-11-28 (Urban & Real Estate Economics)
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