Political polarization and price dispersion: recent evidence from the airline industry during COVID-19

Jihui Chen

Applied Economics Letters, 2025, vol. 32, issue 6, 817-824

Abstract: This paper analyzes the relationship between price dispersion and political polarization of the endpoint states on a given route during the COVID-19 pandemic. The sample includes ticket information from the DB1B database between 2020:Q1 and 2021:Q4. The fixed-effect panel instrument variable (IV) estimation finds evidence of increased price dispersion on routes connecting states led by a Republican governor than those linking Democrat-led states. My analysis adds to the literature by exploiting the impact of political factors (i.e. demand shocks triggered by the COVID-19 policy interventions) on price dispersion using the latest data.

Date: 2025
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DOI: 10.1080/13504851.2023.2289417

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