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When Do Firms Offer Higher Product Quality? Evidence from the Allocation of Inflight Amenities

Author

Listed:
  • Myongjin Kim

    (University of Oklahoma)

  • Qihong Liu

    (University of Oklahoma)

  • Nicholas G. Rupp

    (East Carolina University)

Abstract

We examine how competition impacts the provision of product quality. Using a unique data set of inflight amenities provided by U.S. airlines, we find that the composition of competition matters. There is significantly higher product quality - Wi-Fi, entertainment, and at-the-seat electrical power outlets - on on more competitive routes (with lower HHI). The presence of Southwest Airlines on the route, however, is shown to reduce product quality offerings. We also find significantly higher product quality on routes with more passengers, tourist destinations, and red-eye flights. We find lower posted base ticket prices on routes with Wi-Fi and entertainment amenities.

Suggested Citation

  • Myongjin Kim & Qihong Liu & Nicholas G. Rupp, 2023. "When Do Firms Offer Higher Product Quality? Evidence from the Allocation of Inflight Amenities," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(2), pages 149-177, March.
    • Handle: RePEc:kap:revind:v:62:y:2023:i:2:d:10.1007_s11151-022-09892-9
    DOI: 10.1007/s11151-022-09892-9
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    References listed on IDEAS

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