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Refundability and Price: Empirical Analysis on the Airline Industry

Seongman Moon () and Makoto Watanabe ()

No 1107, Working Papers from Research Institute for Market Economy, Sogang University

Abstract: This paper provides new evidence on price dispersion in the US airline industry. Using the observed fare differences between refundable and non-refundable tickets, we first document evidence on the prices passengers pay for a refund option. We find that the factors related to the value of refund option and customers¡¯ individual demand uncertainty have a significant effect on the relative refund fares. This finding is robust for various market structures. Further, taking into account the variations of the relative refund fares, we investigate the effects of market structure on price dispersion.

Keywords: Price discrimination; Refundability; Competition; Airline industry (search for similar items in EconPapers)
JEL-codes: D43 L13 L93 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-mkt and nep-ure
Date: 2011
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ftp://163.239.156.99/wpaper/MSM_RIME_2011-07.pdf First version, 2011 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:sgo:wpaper:1107

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