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International airline codesharing and consumer choice behavior: misconceptions vs. quality signals

Gerben de Jong (), Christiaan Behrens, Hester van Herk and Erik (E.T.) Verhoef
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Gerben de Jong: VU Amsterdam, SEO Amsterdam Economics
Christiaan Behrens: VU Amsterdam, SEO Amsterdam Economics
Hester van Herk: VU Amsterdam
Erik (E.T.) Verhoef: VU Amsterdam

No 18-077/VIII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We examine the impact of airline codesharing on consumer choice behavior in non-stop international route markets. Using stated preference data, we document that consumer valuation of flights by alien foreign carriers is significantly higher if these flights are offered as codeshare products by consumers' own national carrier or, to a lesser extent, a neighboring national carrier. We empirically rule out quality improvements and frequent flier programs as underlying drivers and explore two alternative explanations: misconceptions about codesharing and codesharing as a quality signal. We find that misconceptions are widespread, but that they do not cause higher valuation of codeshare products. Consistent with signaling, however, codeshare products are valued higher by more risk-averse consumers and on less familiar routes.

Keywords: codesharing; consumer choice behavior; incomplete information; signaling; airline industry (search for similar items in EconPapers)
JEL-codes: L11 L15 L93 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ind and nep-tre
Date: 2018-10-22, Revised 2018-12-02
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