Price Discrimination In The Airline Industry

PRICE DISCRIMINATION IN THE AIRLINE INDUSTRY Frode Steen and Lars Sørgard section of Economics Norwegian School of Economics and business concern political science Helleveien 30, 5045 Bergen NORWAY Emails: frode.steen@nhh.no and lars.sorgard@nhh.no Abstract: The purpose of this report is to talk over the benefit effectuate of dissimilar kinds of scathe discrimination schedules that argon used in the airline sedulousness. We distinguish between versioning, snub to large consumers, and habitual account programs. It is argued that versioning is probably welfare improving, especially in a competitive orbit. Furthermore, it is argued that discounts to large firm has an equivocal effect on welfare in monopoly, while it is probable that it is detrimental to welfare in a competitive setting or in a setting with a dominant allele carrier endanger by entry. Finally, we argue that frequent flyer programs have anticompetitive do in an oligopoly, and especially in a setting wher e an establish is threatened by entry, so that such programs are pass judgment to be detrimental to welfare. communicate submitted to the committee analyzing the airline sedulousness in the Nordic countries, with members from the competitor Authorities in Denmark, Finland, Norway and Sweden © Steen and Sørgard 1 1.

INTRODUCTION impairment discrimination is observed in around industries. It implies that firms are charging contrasting termss from different consumers, and that the price difference cannot be explained by greet differences. It is well hold upn that the airline industry has practiced pric e discrimination for many years. We all know! that on from each one flight the passengers have paid different prices, and that in rough cases we can observe that the highest price is as much as five times the lowest price. Is price discrimination a good or bad issue for the airline passengers and the golf-club? To answer such a question, we mustiness focus on the price discrimination that is most communal in this occurrence industry. A casual observation would be...If you insufficiency to get a full essay, order it on our website: OrderCustomPaper.com

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