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American Economic Journal: Economic Policy: Vol. 6 No. 1 (February 2014)

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

Article Citation

Sengupta, Anirban, and Steven N. Wiggins. 2014. "Airline Pricing, Price Dispersion, and Ticket Characteristics on and off the Internet." American Economic Journal: Economic Policy, 6(1): 272-307.

DOI: 10.1257/pol.6.1.272

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.

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Additional Materials

Online Appendix (168.69 KB) | Download Data Set (58.79 MB) | Author Disclosure Statement(s) (41.52 KB)

Authors

Sengupta, Anirban (Amazon Corporate LLC)
Wiggins, Steven N. (TX A&M U)

JEL Classifications

D83: Search; Learning; Information and Knowledge; Communication; Belief
L11: Production, Pricing, and Market Structure; Size Distribution of Firms
L86: Information and Internet Services; Computer Software
L93: Air Transportation

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