Journal of Political Economy Vol. 102 No. 4 1994
Competition and Price Dispersion in the U.S. Airline Industry
open access
Abstract
The authors study dispersion in the prices an airline charges to different passengers on the same route. This variation in fares is substantial: the expected absolute difference in fares between two passengers on a route is 36 percent of the airline's average ticket price. The pattern of observed price dispersion cannot easily be explained by cost differences alone. Dispersion increases on routes with more competition or lower flight density, consistent with discrimination based on customers' willingness to switch to alternative airlines or flights. The authors argue that the data support models of price discrimination in monopolistically competitive markets.
- DOI
- 10.1086/261950
- Volume
- 102
- Issue
- 4
- Pages
- 653-683
- Language
- en
- Sources
- openalex crossref