Is the Effect of Competition on Price Dispersion Nonmonotonic? Evidence from the U.S. Airline Industry

Mian Dai, Qihong Liu () and Konstantinos Serfes ()
Additional contact information
Mian Dai: Drexel University

The Review of Economics and Statistics, 2014, vol. 96, issue 1, 161-170

Abstract: We investigate the effect of competition on price dispersion in the airline industry. Using panel data from 1993 to 2008, we find a nonmonotonic effect of competition on price dispersion. An increase in competition is associated with greater price dispersion in concentrated markets but with less price dispersion in competitive markets—an inverse-U relationship. Our empirical findings are consistent with an oligopolistic second-degree price discrimination model and encompass contradictory findings in the literature. © 2014 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Keywords: price dispersion; second-degree price discrimination; airline industry (search for similar items in EconPapers)
JEL-codes: D43 L11 L93 (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (70)

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00362 link to full text PDF (application/pdf)
Access to full text is restricted to subscribers.

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:tpr:restat:v:96:y:2014:i:1:p:161-170

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535

Access Statistics for this article

The Review of Economics and Statistics is currently edited by Pierre Azoulay, Olivier Coibion, Will Dobbie, Raymond Fisman, Benjamin R. Handel, Brian A. Jacob, Kareen Rozen, Xiaoxia Shi, Tavneet Suri and Yi Xu

More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by The MIT Press ().