Abstract

http://ssrn.com/abstract=1681337
 
 

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Refundability and Price: Empirical Analysis on the Airline Industry


Makoto Watanabe


VU University Amsterdam, Tinbergen Institute

Seongman Moon


Universidad Carlos III de Madrid - Department of Economics

September 20, 2010


Abstract:     
This paper provides new evidence on price dispersion in the US airline industry. Using the observed fare differences between refundable and non-refundable tickets, we first document evidence on the prices passengers pay for an option of returning their tickets. We found that the factors related to the value of refund option and customers' demand uncertainties have a significant impact on the relative refund fares. This finding turns out to be robust for various market structures. Further, taking into account the differential patterns of the relative refund fares, we investigate the impact of market structure on price dispersions.

Number of Pages in PDF File: 33

Keywords: Price discrimination, Refundability, Competition, Airline industry

JEL Classification: D43, L13, L93

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Date posted: September 24, 2010 ; Last revised: March 15, 2011

Suggested Citation

Watanabe, Makoto and Moon, Seongman, Refundability and Price: Empirical Analysis on the Airline Industry (September 20, 2010). Available at SSRN: http://ssrn.com/abstract=1681337 or http://dx.doi.org/10.2139/ssrn.1681337

Contact Information

Makoto Watanabe
VU University Amsterdam, Tinbergen Institute ( email )
De Boelelaan 1105,
Amsterdam, North Holland 1081 HV
Netherlands
+31 20 5986030 (Phone)
HOME PAGE: http://makoto.wtnb.googlepages.com
Seongman Moon (Contact Author)
Universidad Carlos III de Madrid - Department of Economics ( email )
Calle Madrid 126
Getafe, 28903
Spain
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