AIRLINE PRICING BEHAVIOR UNDER LIMITED INTER‐MODAL COMPETITION |
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| Authors: | Angela Stefania Bergantino Claudia Capozza |
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| Institution: | 1. Phone 0039 080 5049038Fax 0039 080 50499149/042;2. Department of Economics, Management and Business Law, University of Bari Aldo Moro, Italy;3. Department of Economics, Management and Business Law, University of Bari Aldo Moro, ItalyThe authors would like to thank the anonymous referees for their helpful and constructive comments that contributed to improving the final version of the paper. They would also like to thank the editor Wesley W. Wilson for generous comments and support during the review process. Special thanks go to Marco Alderighi, Richard Arnott, Michele Bernasconi, Volodymyr Bilotkach, André de Palma, Alberto Gaggero, Andrew Goetz, Kai Hüschelrath, Marc Ivaldi, and Claudio Piga for useful insights on earlier versions. Finally, the authors also wish to acknowledge the suggestions made by the participants at 17th ATRS Conference, 5th ICEEE, 5th CRNI Conference, 39th EARIE Conference, 14th SIET Conference, RCEA Workshop on “The economics and management of leisure, travel and tourism” and 32nd AISRe Conference. All remaining errors are the authors'. |
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| Abstract: | This paper empirically analyzes airline pricing for short‐haul flights in contexts with no credible threat of inter‐modal competition. To this end, we explore the southern Italian market since it is less accessible by other transport modes and thus fares are the direct outcome of air‐related competition. We show, in fact, that market power matters, depending on the level of intra‐modal competition, and that airlines apply differentiated mark‐ups. Besides, consistent with the implementation of inter‐temporal price discrimination (IPD), we find a non‐monotonic inter‐temporal profile of fares with a turning point included in the interval of the 43rd to 45th days before departure. Finally, we provide evidence that in more competitive markets, airlines are more likely to engage in IPD. (JEL L11, L13, L93) |
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