Dynamic price dispersion in airline markets

Airline Pricing Behaviour Under Limited Intermodal Competition

“…Price dispersion is due to peak load pricing and it is in ‡uenced by the characteristics of the carriers operating on a given route. Consistent with this, Mantin and Koo (2009) highlight that price dispersion is not a¤ected by the market structure. Instead, the presence of LCCs among the competitors enhances dispersion by inducing FSCs to 4 Gerardi and Shapiro (2009) explain that the panel approach allows them to estimate the e¤ect of competition by accounting for changes in the competitive structure of a given route over time rather than changes in competitive structures across routes.…”

Price discrimination strategy of low-cost airlines

“…In general, there is compelling evidence that fares rise in the last 20-30 days before the departure date (Alderighi, 2010;Alderighi et al, 2011;Gaggero & Piga, 2010;Giaume & Guillou, 2004;Mantin & Koo, 2009). Bachis and Piga (2011) analyzed a daily change in airfares for routes operated by low-cost carriers which depart from several European airports.…”

Demand Uncertainty and Capacity Utilization in Airlines

“…We begin by providing motivation for the existence of an upward schedule of prices, as largely documented in the airline industry (see, e.g. Bilotkach et al, 2010;Escobari and Gan, 2007;Mantin and Koo, 2009). To this end, we follow Prescott (1975) and Dana (1999) and derive a price schedule by assuming that prices are set in advance based on the aggregate demand uncertainty distribution.…”