The Effects of Competition on Price Dispersion in the Airline Industry
The Effects of Competition on Price Dispersion in the Airline Industry

Author: Kristopher Gerardi

Publisher:

Published: 2007

Total Pages: 0

ISBN-13:

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This paper analyzes the effects of market structure on price dispersion in the airline industry, using panel data from 1993 through 2006. The results found in this paper contrast with those of Borenstein and Rose (1994), who found that price dispersion increases with competition. We find that competition has a negative effect on price dispersion, in line with the textbook treatment of price discrimination. Specifically, the effects of competition on price dispersion are most significant on routes that we identify as having consumers characterized by relatively heterogeneous elasticities of demand. On routes with a more homogenous customer base, the effects of competition on price discrimination are largely insignificant. We conclude from these results that competition acts to erode the ability of a carrier to price discriminate, resulting in reduced overall price dispersion.

Is the Effect of Competition on Price Dispersion Non-Monotonic? Evidence from the U.S. Airline Industry
Is the Effect of Competition on Price Dispersion Non-Monotonic? Evidence from the U.S. Airline Industry

Author: Mian Dai

Publisher:

Published: 2012

Total Pages: 28

ISBN-13:

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We investigate the effect of competition on price dispersion in the airline industry. Using panel data from 1993 to 2008, we find a non-monotonic effect of competition on price dispersion. An increase in competition is associated with greater price dispersion in concentrated markets but is associated with less price dispersion in competitive markets (i.e. an inverse-U relationship). Our empirical findings are consistent with an oligopolistic second-degree price discrimination model and encompass contradictory findings in the literature.

Competition and Price Dispersion, in the U. S. Airline Industry
Competition and Price Dispersion, in the U. S. Airline Industry

Author: Severin Borenstein

Publisher: Forgotten Books

Published: 2015-06-25

Total Pages: 45

ISBN-13: 9781330369005

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Excerpt from Competition and Price Dispersion, in the U. S. Airline Industry Abstract: We study dispersion in the prices that an airline charges to different customers on the same route. Such variation in airline fares is substantial: on average the expected absolute difference in fares between two of an airline's passengers on a route is thirty-six percent of the airline's average ticket price on the route. The pattern of price disperison that we find does not seem to be explained solely by cost differences. Dispersion is higher on more competitive routes, possibly reflecting a pattern of discrimination against customers who are less willing to switch to alternative flights or airlines. We argue that the data support an explanation based on theories of price discrimination in monopolistically competitive markets. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.

Market Definition Changes the Story
Market Definition Changes the Story

Author: Myongjin Kim

Publisher:

Published: 2017

Total Pages: 43

ISBN-13:

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We analyze the effect of competition on price dispersion in the airline industry and show that the outcome hinges on redefining the extent of a market. Using panel data from 1993 to 2013, an increase in competition has a positive effect on price dispersion in one-way markets but a negative effect in round-trip markets. This is driven by a bigger (smaller) decrease in the 10th percentile of the price distribution in the one-way (round-trip) markets. We provide suggestive evidence that airlines compete more aggressively in the lower tail of the price distribution in one-way markets due to higher markups.

Does Competition Increase Price Dispersion? Recent Evidence from the Airline Industry During the Covid-19 Pandemic
Does Competition Increase Price Dispersion? Recent Evidence from the Airline Industry During the Covid-19 Pandemic

Author: Jihui Chen

Publisher:

Published: 2023

Total Pages: 0

ISBN-13:

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COVID-19 has caused substantial disruptions to the airline industry. This paper analyzes the effects of competition variations related to the pandemic on price dispersion. The sample includes ticket information from the DB1B database between 2018Q1 and 2021Q4. The fixed-effect panel instrument variable (IV) estimation finds evidence of an increased price dispersion during COVID-19 and a positive relationship between competition and dispersion. These results are robust to alternative measures of dispersion and subsamples and may be driven by the altered consumer behavior and the competitive landscape within the industry. Furthermore, the subsample analyses reveal that, as the infection rate rises, the dispersion increases more on leisure routes than big-city routes, on routes with low-cost carriers (LCCs) than those with legacy carriers, and on routes connecting two Republican-led states than those linking Democrat-led states. My analysis adds to the literature by exploiting the impact of changes in market conditions (i.e., the COVID-19 recession) on price and price dispersion using the latest data.

Competition and Price Dispersion in the U.S. Airline Industry
Competition and Price Dispersion in the U.S. Airline Industry

Author: Severin Borenstein

Publisher: Franklin Classics Trade Press

Published: 2018-11-10

Total Pages: 46

ISBN-13: 9780353206625

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This work has been selected by scholars as being culturally important and is part of the knowledge base of civilization as we know it. This work is in the public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. To ensure a quality reading experience, this work has been proofread and republished using a format that seamlessly blends the original graphical elements with text in an easy-to-read typeface. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant.

Competition and Price Dispersion, in the U. S. Airline Industry (Classic Reprint)
Competition and Price Dispersion, in the U. S. Airline Industry (Classic Reprint)

Author: Severin Borenstein

Publisher: Forgotten Books

Published: 2017-10-15

Total Pages: 44

ISBN-13: 9780265336953

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Excerpt from Competition and Price Dispersion, in the U. S. Airline Industry Some of these findings could also be consistent with specific models of peak-load pricing. We discuss this at length below. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.

Strategic Price Competition and Price Disperion in the Airline Industry
Strategic Price Competition and Price Disperion in the Airline Industry

Author: Edward D. Gailey

Publisher:

Published: 2009

Total Pages: 145

ISBN-13: 9781109602234

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It is a generally accepted belief in marketing literature that variation in prices, i.e. price dispersion, is a critical, strategic factor that influences product demand, profitability, and social welfare. While there is a substantial amount of research on price dispersion, prior research has mainly studied price dispersion in the context of consumer heterogeneity, and not comprehensively studied the effects of competition on price dispersion. According to the structure-conduct-performance (SCP) paradigm, market structure and firm conduct are important indicators of firm performance and long-term sustainable competitive advantage. A greater understanding of the influences of market structure and competition on price dispersion provides valuable insights and extends the stream of research on price dispersion. Therefore, the main objective of this dissertation is to increase the understanding of the effects of strategic price competition on price dispersion. Specifically, this research encompasses an evaluation of the effects of strategic price competition in a multi-market context on price dispersion by focusing on market and competition characteristics. The effects of strategic price competition on price dispersion of airline ticket prices are empirically evaluated based on an extensive database from the U.S. Department of Transportation. The results of this study show that multi-market contact between rival firms and the interaction of multi-market contact and market concentration have a significant effect on price dispersion. These results have important academic and managerial implications.

Competition and Price Dispersion in the U.S. Airline Industry - Primary Source Edition
Competition and Price Dispersion in the U.S. Airline Industry - Primary Source Edition

Author: Severin Borenstein

Publisher: Nabu Press

Published: 2014-01-13

Total Pages: 48

ISBN-13: 9781295511242

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This is a reproduction of a book published before 1923. This book may have occasional imperfections such as missing or blurred pages, poor pictures, errant marks, etc. that were either part of the original artifact, or were introduced by the scanning process. We believe this work is culturally important, and despite the imperfections, have elected to bring it back into print as part of our continuing commitment to the preservation of printed works worldwide. We appreciate your understanding of the imperfections in the preservation process, and hope you enjoy this valuable book.