Value of Aggregators

56 Pages Posted: 6 Nov 2017 Last revised: 10 Feb 2020

See all articles by Selin Akca

Selin Akca

University of Zurich - Department of Business Administration

Anita Rao

University of Chicago - Booth School of Business

Date Written: March 1, 2018

Abstract

Aggregators are facing increased scrutiny by regulatory authorities, suggesting these sites have considerable market power. On the other extreme, firms are bypassing aggregators, choosing instead to sell directly to consumers. This raises the question as to which party has more market power: the aggregator or the individual firm. Focusing on the airline industry, we investigate who benefits the most in the airline-aggregator relationship. Specifically, we ask what would happen to airline and aggregator site visits and purchases in the absence of a comprehensive aggregator. We first explore consumers’ search patterns on Southwest, an airline that has never been part of any aggregator. In a descriptive exercise, we find that consumers who book on Southwest are the least likely to visit aggregator sites. Second, we use the 2011 American dispute with Orbitz as an exogenous event, which led to American fares no longer being displayed on Orbitz for five months. We use this dispute to identify who was hurt the most – the aggregator or the airline - in the months following the dispute. Our findings indicate the aggregator loses the most when it is not comprehensive.

Suggested Citation

Akca, Selin and Rao, Anita, Value of Aggregators (March 1, 2018). Available at SSRN: https://ssrn.com/abstract=3064861 or http://dx.doi.org/10.2139/ssrn.3064861

Selin Akca

University of Zurich - Department of Business Administration ( email )

Rämistrasse 71
Zurich, CH-8006
Switzerland
+41 44 634 9620 (Phone)

Anita Rao (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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