Affiliation:
1. Drexel University
2. University of Oklahoma
Abstract
Abstract
We investigate the effect of competition on price dispersion in the airline industry. Using panel data from 1993 to 2008, we find a nonmonotonic effect of competition on price dispersion. An increase in competition is associated with greater price dispersion in concentrated markets but with less price dispersion in competitive markets—an inverse-U relationship. Our empirical findings are consistent with an oligopolistic second-degree price discrimination model and encompass contradictory findings in the literature.
Subject
Economics and Econometrics,Social Sciences (miscellaneous)
Cited by
82 articles.
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