Price Dispersion, Competition, and Efficiency: Evidence from Chicago Based Routes
44 Pages Posted: 31 May 2015 Last revised: 24 Sep 2017
Date Written: January 25, 2017
In this study we analyze the determinants of airline price dispersion. We particularly concentrate on the conduct and marginal cost efficiency. The effect of conduct on price dispersion seems to depend on the characteristics of the market. For the big city routes, we observe positive effect; and for the leisure routes we find negative effect. Also, we find that margial cost efficiency has a negative effect on price dispersion.
Keywords: Market power, Price Discrimination, Efficiency, Airlines
JEL Classification: D40, L10, L93
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