Dynamic Oligopoly Pricing: Evidence from the Airline Industry

Arbeitspapier

We explore how pricing dynamics in the European airline industry vary with the competitive environment. Our results highlight substantial variations in pricing dynamics that are consistent with a theory of intertemporal price discrimination. First, the rate at which prices increase towards the scheduled travel date is decreasing in competition, supporting the idea that competition restrains the ability of airlines to price-discriminate. Second, the sensitivity to competition is substantially increasing in the heterogeneity of the customer base, reflecting further that restraints on price discrimination are only relevant if there is initial scope for price discrimination. These patterns are quantitatively important, explaining about 83 percent of the total within-flight price dispersion, and explaining 17 percent of the observed cross-market variation of pricing dynamics.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB/TR 15 Discussion Paper ; No. 463

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Air Transportation
• Subject: Airline industry ; capacity constraints ; dynamic oligopoly pricing ; intertemporal price dispersion ; price discrimination

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Siegert, Caspar ; Ulbricht, Robert
• Event: Veröffentlichung
• (who): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
• (where): München
• (when): 2014

Further information

• DOI: doi:10.5282/ubm/epub.20866
• Handle: http://hdl.handle.net/10419/103913
• URN: urn:nbn:de:bvb:19-epub-20866-8
• Last update: 10.03.2025, 11:42 AM CET