Competition and Price Dispersion in the U.S. Airline Industry

Severin Borenstein and Nancy Rose

No 3785, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This papers analyzes dispersion in the prices that an airline charges to different customers on the same route. Such variation in airlines fares is substantial: the expected absolute difference in fares between two of an airline's passengers on a route averages thirty-six percent of the airline's average ticket price on the route. The pattern of price dispersion that we find does not seem to be explained solely by cost differences. Dispersion is higher on more competitive routes, possibly reflecting a pattern of discrimination against customers who are less willing to switch to alternative flights or airlines. We argue that the data support an explanation based on theories of price discrimination in monopolistically competitive industries.

Date: 1991-07
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Published as Journal of Political Economy, August 1994, 102 (4): 653-683

Downloads: (external link)
http://www.nber.org/papers/w3785.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:3785

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w3785

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().