Airline choice, switching costs and frequent flyer programs

Fredrik Carlsson () and Åsa Löfgren
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Åsa Löfgren: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 405 30 GÖTEBORG

No 123, Working Papers in Economics from Göteborg University, Department of Economics

Abstract: Switching costs are costs that customers face when switching from one firm to another. In markets such as the airline market where repeated purchases are common, switching costs may be substantial. In this paper we estimate the switching costs for domestic airline routes in Sweden between 1992 and 2002. In addition we also test for the determinants of switching costs. In particular we test to what extent factors such as frequent flyer programs and flag carriers have an effect on switching costs. The paper ends with a brief discussion on the welfare consequences of switching cots, where the connection between habit formation and switching costs is discussed.

Keywords: Switching costs; frequent flyer programs; habit formation (search for similar items in EconPapers)
JEL-codes: D12 L11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-mic
Date: 2004-01-29
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Related works:
Journal Article: Airline choice, switching costs and frequent flyer programmes (2006)
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