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Airline Pricing, Price Dispersion, and Ticket Characteristics on and off the Internet

Author

Listed:
  • Anirban Sengupta
  • Steven N. Wiggins

Abstract

This paper uses transaction data to investigate the effects of Internet purchase on airline fares. Our data include ticket characteristics, restrictions, flight load factors, and dates and channel of purchase. Controlling for ticket and flight characteristics, online purchasers pay about 11 percent less than offline purchasers, which seems rooted in more efficient shopping. The results do not support a spillover in terms of reduced fares or dispersion from greater Internet shopping. The paper also uses the data to reevaluate the relationship between market concentration and fares, but fails to identify any statistically significant, robust relationship.

Suggested Citation

  • Anirban Sengupta & Steven N. Wiggins, 2014. "Airline Pricing, Price Dispersion, and Ticket Characteristics on and off the Internet," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 272-307, February.
    • Handle: RePEc:aea:aejpol:v:6:y:2014:i:1:p:272-307
    Note: DOI: 10.1257/pol.6.1.272
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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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