Do Prices grow more in Euroland? Evidence from the Airline Industry

Claudio Piga () and Enrico Bachis ()

Discussion Paper Series from Department of Economics, Loughborough University

Abstract: Using more than 10 million on-line fares, we study the determinants of yearly fares’ changes in June 2002-June 2005. We verify whether airlines took advantage, after the Euro introduction, of potential inflationary pressures by increasing their fares more in routes to Eurozone nations. The evidence suggests that this was the case only for the period end 2003-end 2004. To control for other factors that may affect fares’ setting decisions, we provide insights into the effects of the takeovers of Go Fly and Buzz by EasyJet and Ryan Air, respectively. Although we generally find that fares offered immediately after the takeover by the acquiring firms were lower than the ones charged by the target firms twelve months earlier, in one case the effects of the takeover on consumers’ welfare are ambiguous.

Keywords: Price discrimination; takeovers, Euro, changeover, low cost carriers, liberalisation. (search for similar items in EconPapers)
JEL-codes: L11 L13 L93 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-com, nep-cse and nep-eec
Date: Written
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Persistent link: http://EconPapers.repec.org/RePEc:lbo:lbowps:2006_8

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