Piga_Bachis_Discrimination_LowCosts.pdf (517.31 kB)
Download filePricing strategies by European low cost carriers
preprint
posted on 2007-05-14, 12:24 authored by Claudio Piga, Enrico BachisWe introduce an on-line pricing tactic where airlines post, at the same time and for the
same flight, fares in different currencies that violate the law of One Price. Unexpectedly for
an on-line market, we find that price discrimination may be accompanied by arbitrage
opportunities and that both tend to persist before a flight’s departure. We find discrimination
to be of a competitive type, although arbitrage opportunities are more likely in concentrated
routes. Finally, the evidence suggests that discrimination may be used to manage stochastic
demand.
History
School
- Business and Economics
Department
- Economics
Publication date
2007Notes
This is a working paper. It is also available at: http://ideas.repec.org/p/lbo/lbowps/2007_10.html.ISSN
1750-4171Language
- en