The Impact of market structure and price discrimination strategies in the airline sector

Angela Bergantino and Claudia Capozza ()
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Claudia Capozza: University of Bari, Italy

No 11_7, Working Papers from SIET Società Italiana di Economia dei Trasporti e della Logistica

Abstract: This paper investigates which factors influence airlines’ decisions when planning pricing strategies. We explore the impact of market structure and airlines pricing behaviour in a specific geographical context characterised by a low level of intermodal competition. The data used is, in fact, collected on a sample of southern Italian routes, for which alternative accessibility through different modes of transport is limited. We focus primarily on a specific type of pricing strategy: the intertemporal price discrimination (IPD). The IPD consists in charging different fares to different travellers according to the days missing to departure when the ticket is bought. The work aims to verify whether market’s concentration levels play a significant role in defining fare levels and, more in particular, whether airlines are more or less keen to engage in IPD when competition increases or when it reduces. The paper is structured as follows. In Section 2 we survey the relevant literature; the data collection is described Section 3 and in Section 4 we present the empirical strategy. Afterward, in Section 5 we discuss the main outcomes and in Section 6 we draw some conclusions.

Pages: 8 pages
Date: 2011, Revised 2011
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Citations: View citations in EconPapers (2)

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