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Price Discrimination along Multiple Dimensions: New Evidence from a Regional Airline

Ambarish Chandra

Working Papers from University of Toronto, Department of Economics

Abstract: I examine the case of a firm that practices both second-degree and third-degree price discrimination. I present a model showing conditions under which the premium for higher quality can either rise or fall as the firm implements group pricing. I then use new data from a regional airline to estimate how the two kinds of price discrimination interact, and how each is affected by changes in competition. I establish three key results, all new to the literature. First, in different markets, the two kinds of price discrimination can either offset or reinforce each other, in a manner that fits the model's predictions. Second, inter-temporal differences in prices are purely driven by price discrimination, rather than by scarcity pricing. Third, competition increases the extent of both kinds of price discrimination.

Keywords: Price Discrimination; Airlines; Advance Purchases; Competition (search for similar items in EconPapers)
JEL-codes: L1 L9 (search for similar items in EconPapers)
Pages: Unknown pages
Date: 2020-09-17
New Economics Papers: this item is included in nep-com, nep-ind and nep-ure
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