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Price Discrimination and Focal Points for Tacit Collusion: Evidence from the Airline Industry
| Content Provider | Semantic Scholar |
|---|---|
| Author | Escobari, Diego Rupp, Nicholas G. Meskey, Joseph |
| Copyright Year | 2007 |
| Abstract | We use unique data sets with round-the-clock posted fares and a regression-discontinuity design to identify price discrimination in advance-purchase discounts. Price discrimination increases fares by 14% between two and one week before departure, and by 7.6% between three and two weeks to departure. While competition reduces price discrimination, it is unaffected by product variety for a multiproduct monopolist. The results show that the arbitrary thresholds of 7 and 14 days-in-advance serve as focal points for tacit collusion and to implement price discrimination in competitive markets. For round-trip tickets discrimination depends on the days-in-advance of both the outbound and inbound flights. |
| File Format | PDF HTM / HTML |
| DOI | 10.2139/ssrn.2815279 |
| Alternate Webpage(s) | https://faculty.utrgv.edu/diego.escobari/papers/2019_rdd_wp.pdf |
| Alternate Webpage(s) | https://doi.org/10.2139/ssrn.2815279 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
