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How does COVID-19 affect intertemporal price dispersion? Evidence from the airline industry

Luttmann, Alexander and Gaggero, Alberto A (2022): How does COVID-19 affect intertemporal price dispersion? Evidence from the airline industry.

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Abstract

This study provides empirical evidence documenting how COVID-19 affects intertemporal price dispersion in the airline industry. Exploiting a unique panel of 43 million fares collected before and during the pandemic, we find that airlines discounted fares by an average of 57%. The rate of intertemporal price increases also declined, particularly in the last week to departure. We also find that flight-level price dispersion increased during the pandemic. These results are found to be driven primarily by the diffusion of COVID-19, with slightly more emphasis on the spread at the destination as opposed to the origin market.

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