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Avoiding Competition-enhancing Price Discrimination: Evidence from the U.s. Airline Industry
| Content Provider | Semantic Scholar |
|---|---|
| Author | Lewis, Matthew |
| Copyright Year | 2018 |
| Abstract | The theoretical literature has identified conditions under which price discrimination in oligopoly markets can lead to more aggressive competition and lower profits, yet few empirical studies have examined the extent to which this occurs or the ability of firms to avoid this lower-profit equilibrium. In this study I describe how competition-enhancing discrimination might arise in the airline industry and formulate a new empirical approach that utilizes price quote data to measure price discrimination while controlling for potentially confounding cost heterogeneity. The empirical findings reveal that carriers within the U.S. domestic market systematically avoid this form of discrimination, suggesting a successful coordination on uniform pricing that has likely allowed carriers to maintain higher profits. ∗John E. Walker Department of Economics, Clemson University, 228 Sirrine Hall, Box 341309, Clemson, SC 29634-1309, mslewis@clemson.edu |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://www.terry.uga.edu/media/events/documents/directional_discrimination_3-1-2018.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
