Escobari, Diego (2012): Asymmetric Price Adjustments in Airlines.
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This paper uses a unique daily time series data set to investigate the asymmetric response of airline prices to capacity costs driven by demand fluctuations. We use a Markov regime-switching model with time-varying transition probabilities to capture the time variation in the response. The results show strong evidence of asymmetric price adjustments: positive cost shifts have a large positive effect, while negative cost shifts have no effect. The asymmetry is also explained by summer travel, but not by the size of cost shifts. The findings show the importance of consumer heterogeneity and capacity constraints as a source of asymmetric responses.
|Item Type:||MPRA Paper|
|Original Title:||Asymmetric Price Adjustments in Airlines|
|Keywords:||Asymmetric pricing; Airlines; Regime switching; Capacity costs|
|Subjects:||L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L93 - Air Transportation
C - Mathematical and Quantitative Methods > C2 - Single Equation Models; Single Variables > C22 - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
|Depositing User:||Diego Escobari|
|Date Deposited:||22. Oct 2012 07:17|
|Last Modified:||11. Feb 2013 16:42|
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