Airline Market Power and Intertemporal Price Dispersion

Alberto Gaggero and Claudio Piga

Discussion Paper Series from Department of Economics, Loughborough University

Abstract: This paper analyzes the empirical relationship between market structure and price dispersion in the airline markets connecting the UK and the Republic of Ireland. Price dispersion is measured by a number of inequality indexes, calculated using fares posted on the Internet at specific days before takeoff. We find a negative correlation between market dominance and price dispersion; thus competition appears to hinder the airlines' ability to price discriminate to exploit consumers' heterogeneity in booking time preferences. Moreover, in the Christmas and Easter periods of high demand, fares are less dispersed, possibly because airlines target a less heterogenous set of consumers.

Keywords: Intertemporal pricing; competition; price dispersion. (search for similar items in EconPapers)
JEL-codes: D43 L10 L93 (search for similar items in EconPapers)
Date: 2009-07, Revised 2009-07
New Economics Papers: this item is included in nep-com, nep-mkt, nep-tur and nep-ure
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Citations: View citations in EconPapers (26)

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Related works:
Journal Article: Airline Market Power and Intertemporal Price Dispersion (2011)
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