The effect of air traffic delays on airline prices |
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Authors: | Silke J Forbes |
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Institution: | aDepartment of Economics, University of California at San Diego, 9500 Gilman Drive #0508, La Jolla, CA 92093-0508, United States |
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Abstract: | A legislative change in takeoff and landing restrictions at LaGuardia Airport provides an opportunity to study the effect of an exogenous shock to product quality on prices in the airline industry. I test how the price response varies with the degree of competition in the market. I find that prices fall by $1.42 on average for each additional minute of flight delay, and that the price response is substantially larger in more competitive markets. |
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Keywords: | Airline pricing Flight delays Product quality Competition |
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