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Differences in Average Prices on the Internet: Evidence from the Online Market for Air Travel

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  • Jihui Chen

Abstract

Using daily ticket price quotes, this article examines whether there are systematic differences in the airfares obtained through different online travel Web sites. I find that after controlling for ticket availability and heterogeneities that affect ticket prices, there is little systematic difference in the average fares. The parity in average fares observed in 2002 data is in contrast to differences as large as 18% documented by Clemons et al. (2002), and stems in part from the fact that airlines directly compete for online travel dollars today, but did not in 1997. (JEL L2) Copyright 2006, Oxford University Press.

Suggested Citation

  • Jihui Chen, 2006. "Differences in Average Prices on the Internet: Evidence from the Online Market for Air Travel," Economic Inquiry, Western Economic Association International, vol. 44(4), pages 656-670, October.
  • Handle: RePEc:oup:ecinqu:v:44:y:2006:i:4:p:656-670
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    File URL: http://hdl.handle.net/10.1093/ei/cbj040
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    Cited by:

    1. Nestor Duch-Brown & Bertin Martens, 2014. "Consumer benefits from the EU Digital Single Market: evidence from household appliances markets," JRC Working Papers on Digital Economy 2014-03, Joint Research Centre (Seville site).
    2. Diego Escobari & Li Gan, 2007. "Price Dispersion under Costly Capacity and Demand Uncertainty," NBER Working Papers 13075, National Bureau of Economic Research, Inc.
    3. Levy, David M. & Makowsky, Michael D., 2010. "Price dispersion and increasing returns to scale," Journal of Economic Behavior & Organization, Elsevier, vol. 73(3), pages 406-417, March.
    4. Volodymyr Bilotkach & Nicholas G. Rupp & Vivek Pai, 2013. "Value of a Platform to a Seller: Case of American Airlines and Online Travel Agencies," Working Papers 13-08, NET Institute.
    5. Roma, Paolo & Zambuto, Fabio & Perrone, Giovanni, 2014. "Price dispersion, competition, and the role of online travel agents: Evidence from business routes in the Italian airline market," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 69(C), pages 146-159.
    6. Merigó, José M. & Palacios-Marqués, Daniel & del Mar Benavides-Espinosa, María, 2015. "Aggregation methods to calculate the average price," Journal of Business Research, Elsevier, vol. 68(7), pages 1574-1580.
    7. 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.

    More about this item

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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