IDEAS home Printed from https://ideas.repec.org/a/eee/jaitra/v16y2010i5p251-257.html
   My bibliography  Save this article

Reputation, search cost, and airfares

Author

Listed:
  • Bilotkach, Volodymyr

Abstract

As cost of search for consumers decreases with the spread of the internet; researchers question whether this trend will lead to lower price or higher product differentiation. This paper examines a sample of offered fares to see if an airline choosing not to distribute its tickets via a channel where competitors' offers are directly observable may attempt taking advantage of potential customers. We find this to be the case. Our study suggests that the US airline industry appears to be evolving toward more product differentiation in the internet age.

Suggested Citation

  • Bilotkach, Volodymyr, 2010. "Reputation, search cost, and airfares," Journal of Air Transport Management, Elsevier, vol. 16(5), pages 251-257.
    • Handle: RePEc:eee:jaitra:v:16:y:2010:i:5:p:251-257
    DOI: 10.1016/j.jairtraman.2010.01.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969699710000141
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jairtraman.2010.01.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Karen Clay & Ramayya Krishnan & Eric Wolff & Danny Fernandes, 2002. "Retail Strategies on the Web: Price and Non–price Competition in the Online Book Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 351-367, September.
    2. Charles Boguslaski & Harumi Ito & Darin Lee, 2004. "Entry Patterns in the Southwest Airlines Route System," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 25(3), pages 317-350, August.
    3. repec:bla:jindec:v:50:y:2002:i:3:p:351-67 is not listed on IDEAS
    4. Harumi Ito & Darin Lee, 2007. "Domestic Code Sharing, Alliances, and Airfares in the U.S. Airline Industry," Journal of Law and Economics, University of Chicago Press, vol. 50(2), pages 355-380.
    5. Glenn Ellison & Sara Fisher Ellison, 2005. "Lessons About Markets from the Internet," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 139-158, Spring.
    6. Jeffrey R. Brown & Austan Goolsbee, 2002. "Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 481-507, June.
    7. Michael R. Baye & John Morgan & Patrick Scholten, 2004. "Price Dispersion In The Small And In The Large: Evidence From An Internet Price Comparison Site," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 463-496, December.
    8. Steven A. Morrison, 2001. "Actual, Adjacent, and Potential Competition Estimating the Full Effect of Southwest Airlines," Journal of Transport Economics and Policy, University of Bath, vol. 35(2), pages 239-256, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jost Daft & Sascha Albers & Sebastian Stabenow, 2021. "From product-oriented flight providers to customer-centric retailers: a dynamic offering framework and implementation guidelines for airlines," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(6), pages 615-625, December.
    2. Dudás, Gábor & Boros, Lajos & Pál, Viktor & Pernyész, Péter, 2016. "Analysis of the lowest airfares considering the different business models of airlines, the case of Budapest," MPRA Paper 74502, University Library of Munich, Germany.
    3. Volodymyr Bilotkach & Nicholas G. Rupp & Vivek Pai, 2013. "Value of a Platform to a Seller: Case of American Airlines and Online Travel Agencies," Working Papers 13-08, NET Institute.
    4. Adler, Nicole & Gellman, Aaron, 2012. "Strategies for managing risk in a changing aviation environment," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 24-35.
    5. Christopher P. Holland & Julia A. Jacobs & Stefan Klein, 2016. "The role and impact of comparison websites on the consumer search process in the US and German airline markets," Information Technology & Tourism, Springer, vol. 16(1), pages 127-148, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Haynes, Michelle & Thompson, Steve, 2008. "Price, price dispersion and number of sellers at a low entry cost shopbot," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 459-472, March.
    2. James D. Dana Jr. & Eugene Orlov Jr., 2014. "Internet Penetration and Capacity Utilization in the US Airline Industry," American Economic Journal: Microeconomics, American Economic Association, vol. 6(4), pages 106-137, November.
    3. Gebhardt, Georg, 2018. "Measuring the competitive impact of the internet: Evidence from a natural experiment in broadband access," International Journal of Industrial Organization, Elsevier, vol. 57(C), pages 84-113.
    4. Michael R. Baye & John Morgan, 2009. "Brand and Price Advertising in Online Markets," Management Science, INFORMS, vol. 55(7), pages 1139-1151, July.
    5. Alfredo Martin-Oliver & Vicente Salas-Fumas & Jesús Saurina, 2008. "Search Cost and Price Dispersion in Vertically Related Markets: The Case of Bank Loans and Deposits," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 33(4), pages 297-323, December.
    6. Maris Goldmanis & Ali Hortaçsu & Chad Syverson & Önsel Emre, 2010. "E-Commerce and the Market Structure of Retail Industries," Economic Journal, Royal Economic Society, vol. 120(545), pages 651-682, June.
    7. Grewal, Dhruv & Janakiraman, Ramkumar & Kalyanam, Kirthi & Kannan, P.K. & Ratchford, Brian & Song, Reo & Tolerico, Stephen, 2010. "Strategic Online and Offline Retail Pricing: A Review and Research Agenda," Journal of Interactive Marketing, Elsevier, vol. 24(2), pages 138-154.
    8. Tang, Zhulei & Smith, Michael D. & Montgomery, Alan, 2010. "The impact of shopbot use on prices and price dispersion: Evidence from online book retailing," International Journal of Industrial Organization, Elsevier, vol. 28(6), pages 579-590, November.
    9. Zhao, Dongmei & Savage, Scott J. & Chen, Yongmin, 2008. "Ownership, location and prices in chinese electronic commerce markets," Information Economics and Policy, Elsevier, vol. 20(2), pages 192-207, June.
    10. Jan Brueckner & Darin Lee & Ethan Singer, 2014. "City-Pairs Versus Airport-Pairs: A Market-Definition Methodology for the Airline Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(1), pages 1-25, February.
    11. Hyun S. Shin & Dominique M. Hanssens & Kyoo il Kim, 2016. "The role of online buzz for leader versus challenger brands: the case of the MP3 player market," Electronic Commerce Research, Springer, vol. 16(4), pages 503-528, December.
    12. Camilla Andersson & Mintewab Bezabih & Andrea Mannberg, 2015. "The Ethiopian Commodity Exchange and spatial price dispersion," GRI Working Papers 204, Grantham Research Institute on Climate Change and the Environment.
    13. De los Santos, Babur, 2018. "Consumer search on the Internet," International Journal of Industrial Organization, Elsevier, vol. 58(C), pages 66-105.
    14. Jens‐Peter Loy & Dieter Pennerstorfer & Daniela Rroshi & Christoph Weiss & Biliana Yontcheva, 2022. "Consumer Information and Price Transmission: Empirical Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 70(3), pages 631-683, September.
    15. Andersson, Camilla & Bezabih, Mintewab & Mannberg, Andrea, 2015. "The Ethiopian Commodity Exchange and spatial price dispersion," GlobalFood Discussion Papers 209963, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    16. Anindya Ghose & Yuliang Yao, 2011. "Using Transaction Prices to Re-Examine Price Dispersion in Electronic Markets," Information Systems Research, INFORMS, vol. 22(2), pages 269-288, June.
    17. Kai Huschelrath & Kathrin Muller, 2014. "The Value Of Bluer Skies. – How Much Do Consumers Gain From Entry By Jetblue Airways In Long-Haul U.S. Airline Markets?," Articles, International Journal of Transport Economics, vol. 41(1).
    18. Gayle, Philip G. & Wu, Chi-Yin, 2013. "A re-examination of incumbents’ response to the threat of entry: Evidence from the airline industry," Economics of Transportation, Elsevier, vol. 2(4), pages 119-130.
    19. Moraga-Gonzalez, Jose L. & Wildenbeest, Matthijs R., 2011. "Comparison sites," IESE Research Papers D/933, IESE Business School.
      • Jose Luis Moraga-Gonzalez & Matthijs R. Wildenbeest, 2011. "Comparison Sites," Working Papers 2011-04, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    20. Hackl, Franz & Kummer, Michael E. & Winter-Ebmer, Rudolf & Zulehner, Christine, 2014. "Market structure and market performance in E-commerce," European Economic Review, Elsevier, vol. 68(C), pages 199-218.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaitra:v:16:y:2010:i:5:p:251-257. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/journal-of-air-transport-management/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.