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The Impact of market structure and price discrimination strategies in the airline sector

Author

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  • Angela Stefania Bergantino

    (University of Bari, Italy)

  • Claudia Capozza

    (University of Bari, Italy)

Abstract
This paper investigates which factors influence airlines’ decisions when planning pricing strategies. We explore the impact of market structure and airlines pricing behaviour in a specific geographical context characterised by a low level of intermodal competition. The data used is, in fact, collected on a sample of southern Italian routes, for which alternative accessibility through different modes of transport is limited. We focus primarily on a specific type of pricing strategy: the intertemporal price discrimination (IPD). The IPD consists in charging different fares to different travellers according to the days missing to departure when the ticket is bought. The work aims to verify whether market’s concentration levels play a significant role in defining fare levels and, more in particular, whether airlines are more or less keen to engage in IPD when competition increases or when it reduces. The paper is structured as follows. In Section 2 we survey the relevant literature; the data collection is described Section 3 and in Section 4 we present the empirical strategy. Afterward, in Section 5 we discuss the main outcomes and in Section 6 we draw some conclusions.

Suggested Citation

  • Angela Stefania Bergantino & Claudia Capozza, 2011. "The Impact of market structure and price discrimination strategies in the airline sector," Working Papers 11_7, SIET Società Italiana di Economia dei Trasporti e della Logistica, revised 2011.
    • Handle: RePEc:sit:wpaper:11_7
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    File URL: http://www.sietitalia.org/wpsiet/Bergantino-Capozza_XIIIriunionesiet_2011.pdf
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    Cited by:

    1. Zhang, Rui & Johnson, Daniel & Zhao, Weiming & Nash, Chris, 2019. "Competition of airline and high-speed rail in terms of price and frequency: Empirical study from China," Transport Policy, Elsevier, vol. 78(C), pages 8-18.

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