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Comparing Price Dispersion on and off the Internet Using Airline Transaction Data

Author

Listed:
  • Sengupta Anirban

    (Analysis Research Planning Corporation)

  • Wiggins Steven N.

    (Texas A&M University)

Abstract

The internet presumably reduces search costs and creates an “efficient” market. Prior research quantifying the dispersion in the electronic market, however, has yielded mixed results. Some recent research has documented very low levels of dispersion in internet attributing it to the use of transaction prices as opposed to posted prices. We revisit this issue using contemporaneous online and offline transaction data for airline tickets including ticket characteristics and medium of sale permitting comparison of online versus offline price dispersion. We find evidence of significantly lower price dispersion on the internet compared to offline market, though some positive dispersion still persists.

Suggested Citation

  • Sengupta Anirban & Wiggins Steven N., 2012. "Comparing Price Dispersion on and off the Internet Using Airline Transaction Data," Review of Network Economics, De Gruyter, vol. 11(1), pages 1-38, March.
    • Handle: RePEc:bpj:rneart:v:11:y:2012:i:1:n:4
    DOI: 10.1515/1446-9022.1244
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    References listed on IDEAS

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    Cited by:

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    3. Ivaldi, Marc & Petrova, Milena & Urdanoz, Miguel, 2022. "Airline cooperation effects on airfare distribution: An auction-model-based approach," Transport Policy, Elsevier, vol. 115(C), pages 239-250.
    4. Tomasz Stanisław Szopiński & Robert Nowacki, 2014. "Plane Ticket Price Dispersion in the Online Selling System in Poland," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 8(2), June.
    5. Marc Ivaldi & Milena J Petrova & Miguel Urdanoz, 2021. "Airline Cooperation Effects on Airfare Distribution: An Auction-model-based Approach," Post-Print hal-03455506, HAL.
    6. Tomasz Stanisław Szopiński & Robert Nowacki, 2015. "The Influence of Purchase Date and Flight Duration over the Dispersion of Airline Ticket Prices," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 9(3), September.

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