On the Extent to which the Presence of Intermediate-stop(s) Air Travel Products Influences the Pricing of Nonstop Air Travel Products

Philip Gayle () and Chi-Yin Wu

MPRA Paper from University Library of Munich, Germany

Abstract: Analysts of air travel markets, which include antitrust authorities, are interested in understanding the extent to which the presence of intermediate stop(s) products influences the pricing of nonstop products. This paper uses a structural econometric model to investigate the potential pricing interdependence between these two product types in domestic air travel markets. Counterfactual experiments using the estimated model suggest that in many (but far from a majority) markets the current prices of nonstop products are at least 5% lower than they would otherwise be owing to the presence of intermediate-stop(s) products.

Keywords: Substitutability and Pricing Interdependence between Differentiated Air Travel Products; Discrete Choice Demand Model; Random Coefficients Logit (search for similar items in EconPapers)
JEL-codes: L13 L40 L93 (search for similar items in EconPapers)
Date: 2015-05-05
New Economics Papers: this item is included in nep-com, nep-dcm, nep-ind, nep-mkt and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: On the Extent to which the Presence of Intermediate-stop(s) Air Travel Products Influences the Pricing of Nonstop Air Travel Products (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:64190

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