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Markets: The U.S. Lodging Industry

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  • Arturs Kalnins

Abstract

The U.S. lodging industry appears highly competitive. Ownership concentration appears to be low. Fixed costs are high relative to variable costs and unused rooms cannot be stored for future sale, so price-cutting should be attractive. However, this paper argues that, unexpectedly, oligopolistic market structures in many local lodging markets, combined with behavioral norms of cooperation, sustain profits in what might otherwise be an industry of cutthroat competition. I describe the patterns of competition and cooperation in the U.S. lodging industry, summarizing theoretical arguments, empirical research, descriptive statistics from industry and government sources, and anecdotal evidence from the trade press and from interviews conducted with managers of over 200 properties nationwide.

Suggested Citation

  • Arturs Kalnins, 2006. "Markets: The U.S. Lodging Industry," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 203-218, Fall.
  • Handle: RePEc:aea:jecper:v:20:y:2006:i:4:p:203-218
    Note: DOI: 10.1257/jep.20.4.203
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    1. repec:eee:touman:v:46:y:2015:i:c:p:114-122 is not listed on IDEAS
    2. Darlene Chisholm & George Norman, 2012. "Spatial competition and market share: an application to motion pictures," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 36(3), pages 207-225, August.
    3. Courty, Pascal & Liu, Wenyu, 2013. "Opaque Selling: Static or Inter-Temporal Price Discrimination?," CEPR Discussion Papers 9463, C.E.P.R. Discussion Papers.
    4. Chiara Farronato & Andrey Fradkin, 2018. "The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb," NBER Working Papers 24361, National Bureau of Economic Research, Inc.
    5. Mitsuru Sunada, 2012. "Competition among movie theaters: an empirical investigation of the Toho–Subaru antitrust case," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 36(3), pages 179-206, August.

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