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AIRLINE PRICING BEHAVIOR UNDER LIMITED INTER‐MODAL COMPETITION
Author(s) -
Bergantino Angela Stefania,
Capozza Claudia
Publication year - 2015
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12104
Subject(s) - competition (biology) , modal , economics , market power , outcome (game theory) , microeconomics , point (geometry) , econometrics , ecology , chemistry , geometry , mathematics , polymer chemistry , biology , monopoly
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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