Competition and price dispersion: evidence from airline and high-speed rail competition in China

Zaichao Du, Han Li, Feng Wei and Lan Zhang

Industrial and Corporate Change, 2024, vol. 33, issue 3, 670-693

Abstract: The introduction of the Beijing–Shanghai high-speed rail (Launch) and the Wenzhou bullet-train collision (Crash) in China provided a unique occasion to study the effect of competition on price dispersion. Results show that price dispersion increased by about 48% after the Launch, as airlines offered greater discounts to price-elastic consumers than to price-inelastic consumers. By contrast, price dispersion decreased by about 55% after the Crash, as airlines raised prices more for price-elastic consumers than for price-inelastic consumers.

Date: 2024
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