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Dynamic Oligopoly Pricing: Evidence from the Airline Industry

Caspar Siegert () and Robert Ulbricht

No 14-478, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We explore how pricing dynamics in the European airline industry vary with competition and document patterns that are consistent with intertemporal price discrimination. First, the rate at which prices increase over time decreases in competition, supporting the idea that competition restrains the ability of airlines to price-discriminate against late-arriving customers. Second, the sensitivity to competition increases in the heterogeneity of the customer base, reflecting that restraints on price discrimination are only relevant when there is initial scope for discrimination. The patterns explain 83 percent of the observed within-flight price dispersion and 17 percent of the cross-market variation in pricing dynamics.

Keywords: Airline industry; capacity constraints; dynamic oligopoly pricing; intertemporal price dispersion; price discrimination (search for similar items in EconPapers)
JEL-codes: D43 D92 L11 L93 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind, nep-mkt, nep-tre and nep-ure
Date: 2014-03, Revised 2019-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

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Working Paper: Dynamic Oligopoly Pricing: Evidence from the Airline Industry (2014) Downloads
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