Crying Wolf? On the Price Discrimination of Online Airline Tickets
نویسندگان
چکیده
Price discrimination refers to the practice of dynamically varying the prices of goods based on a customer’s purchasing power and willingness to pay. In this paper, motivated by several anecdotal accounts, we report on a three-week experiment, conducted in search of price discrimination in airline tickets. Despite presenting the companies with multiple opportunities for discriminating us, and contrary to our expectations, we do not find any evidence for systematic price discrimination. At the same time, we witness the highly volatile prices of certain airlines which make it hard to establish cause and effect. Finally, we provide alternative explanations for the observed price differences.
منابع مشابه
A Model of Optimal Consumer Search and Price Discrimination in the Airline Industry
The welfare effects of price discrimination in the market for airfare can be ambiguous: price discrimination can increase airline revenue, but it can also allow for a more efficient allocation of tickets. This paper examines the market for airfare with a structural model of consumer search. My model features sophisticated consumers with rational beliefs about future price movements. Consumers i...
متن کاملThe Nature of Competition in Electronic Markets: An Empirical Investigation of Online Travel Agent Offerings
Several authors have argued that because modern computing and communications technologies reduce buyer search costs and other market inefficiencies, there should be intense price competition between sellers in electronic markets. This paper examines this prediction using data on the airline ticket offerings of online travel agents (OTA). We find that different OTAs offer tickets with substantia...
متن کاملComparing Price Dispersion on and off the Internet Using Airline Transaction Data
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 off...
متن کاملPricing Strategy and Technology Choices: An Empirical Investigation of “Everyday Low Price” in the Domestic US Airline Sector
There is a rich literature in economics on factors that govern airline prices. With approximately 50% of airline tickets sold online, there is now a renewed interest in investigating airline pricing particularly amongst Information Systems (IS) researchers. While market transparency created by online travel agents (OTAs) is a motivation enough to re-examine airline pricing, one missing piece ca...
متن کاملImage Pricing: Airline Competition on the Internet
Pricing and positioning are among the most important strategic decisions for every online firm in today’s competitive environment. Traditionally retailers adopt different price formats as store positioning and segmentation strategies by signaling to consumers their specific pricing structures. In particular, “everyday low price” (EDLP) has proved to be a successful strategy for vendors in physi...
متن کامل