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Competition and price dispersion: evidence from airline and high-speed rail competition in China

Author

Listed:
  • Zaichao Du
  • Han Li
  • Feng Wei
  • Lan Zhang

Abstract

The introduction of the Beijing–Shanghai high-speed rail (Launch) and the Wenzhou bullet-train collision (Crash) in China provided a unique occasion to study the effect of competition on price dispersion. Results show that price dispersion increased by about 48% after the Launch, as airlines offered greater discounts to price-elastic consumers than to price-inelastic consumers. By contrast, price dispersion decreased by about 55% after the Crash, as airlines raised prices more for price-elastic consumers than for price-inelastic consumers.

Suggested Citation

  • Zaichao Du & Han Li & Feng Wei & Lan Zhang, 2024. "Competition and price dispersion: evidence from airline and high-speed rail competition in China," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(3), pages 670-693.
    • Handle: RePEc:oup:indcch:v:33:y:2024:i:3:p:670-693.
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