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Comparing Price Dispersion on and off the Internet Using Airline Transaction Data

  • Sengupta Anirban

    (Analysis Research Planning Corporation)

  • Wiggins Steven N.

    (Texas A&M University)

Registered author(s):

    The internet presumably reduces search costs and creates an “efficient” market. Prior research quantifying the dispersion in the electronic market, however, has yielded mixed results. Some recent research has documented very low levels of dispersion in internet attributing it to the use of transaction prices as opposed to posted prices. We revisit this issue using contemporaneous online and offline transaction data for airline tickets including ticket characteristics and medium of sale permitting comparison of online versus offline price dispersion. We find evidence of significantly lower price dispersion on the internet compared to offline market, though some positive dispersion still persists.

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    Article provided by De Gruyter in its journal Review of Network Economics.

    Volume (Year): 11 (2012)
    Issue (Month): 1 (March)
    Pages: 1-38

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    Handle: RePEc:bpj:rneart:v:11:y:2012:i:1:n:4
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    7. Michael R. Baye & John Morgan & Patrick Scholten, 2004. "Price Dispersion In The Small And In The Large: Evidence From An Internet Price Comparison Site," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 463-496, December.
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    13. Anirban Sengupta & Steven Wiggins, 2006. "Airline Pricing, Price Dispersion and Ticket Characteristics On and Off the Internet," Working Papers 06-07, NET Institute, revised Oct 2006.
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