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Article: Price formats as a source of price dispersion: A Study of online and ofline pices in the dmestic U.S. arline markets

TitlePrice formats as a source of price dispersion: A Study of online and ofline pices in the dmestic U.S. arline markets
Authors
KeywordsAirline industry
EDLP
Hierarchical linear modeling
Online markets
Price dispersion
Issue Date2011
PublisherINFORMS. The Journal's web site is located at http://isr.pubs.informs.org
Citation
Information Systems Research, 2011, v. 22 n. 1, p. 83-98 How to Cite?
AbstractAlarge body of research in economics, information systems, and marketing has sought to understand sources of price dispersion. Previous empirical work has mainly offered consumer- and/or product-based explanations for this phenomenon. In contrast, our research explores the key role played by vendors' price-format adoption in explaining price dispersion. We empirically analyze over a half-million online and offline prices offered by major U.S. airlines in the top 500 domestic markets. Our study shows that a vendor's price format remains an important source of price dispersion in both channels even after accounting for other factors known to impact dispersion in airline ticket prices. Importantly, this finding is true for both transacted and posted tickets. We document several other interesting empirical findings. First, the lower variance in the prices of "everyday low price" (EDLP) firms serves to reduce the market-level dispersion in prices when such firms are present. Moreover, the price variance of non-EDLP firms in these markets is also lower than in those markets in which EDLP competitors are absent. Second, we also find that dispersion in offered prices increases closer to the departure date, which is consistent with theoretical assertion that price dispersion increases with reservation prices. Finally, we continue to observe dispersion of online prices even after accounting for vendor strategy and other known sources of dispersion, suggesting that the prices are unlikely to converge even in the presence of sophisticated online search mechanisms.
Persistent Identifierhttp://hdl.handle.net/10722/157734
ISSN
2015 Impact Factor: 3.047
2015 SCImago Journal Rankings: 4.397
SSRN
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorChellappa, RKen_HK
dc.contributor.authorSin, RGen_HK
dc.contributor.authorSiddarth, Sen_HK
dc.date.accessioned2012-08-08T08:55:14Z-
dc.date.available2012-08-08T08:55:14Z-
dc.date.issued2011en_HK
dc.identifier.citationInformation Systems Research, 2011, v. 22 n. 1, p. 83-98en_HK
dc.identifier.issn1047-7047en_HK
dc.identifier.urihttp://hdl.handle.net/10722/157734-
dc.description.abstractAlarge body of research in economics, information systems, and marketing has sought to understand sources of price dispersion. Previous empirical work has mainly offered consumer- and/or product-based explanations for this phenomenon. In contrast, our research explores the key role played by vendors' price-format adoption in explaining price dispersion. We empirically analyze over a half-million online and offline prices offered by major U.S. airlines in the top 500 domestic markets. Our study shows that a vendor's price format remains an important source of price dispersion in both channels even after accounting for other factors known to impact dispersion in airline ticket prices. Importantly, this finding is true for both transacted and posted tickets. We document several other interesting empirical findings. First, the lower variance in the prices of "everyday low price" (EDLP) firms serves to reduce the market-level dispersion in prices when such firms are present. Moreover, the price variance of non-EDLP firms in these markets is also lower than in those markets in which EDLP competitors are absent. Second, we also find that dispersion in offered prices increases closer to the departure date, which is consistent with theoretical assertion that price dispersion increases with reservation prices. Finally, we continue to observe dispersion of online prices even after accounting for vendor strategy and other known sources of dispersion, suggesting that the prices are unlikely to converge even in the presence of sophisticated online search mechanisms.en_HK
dc.languageengen_US
dc.publisherINFORMS. The Journal's web site is located at http://isr.pubs.informs.orgen_HK
dc.relation.ispartofInformation Systems Researchen_HK
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectAirline industryen_HK
dc.subjectEDLPen_HK
dc.subjectHierarchical linear modelingen_HK
dc.subjectOnline marketsen_HK
dc.subjectPrice dispersionen_HK
dc.titlePrice formats as a source of price dispersion: A Study of online and ofline pices in the dmestic U.S. arline marketsen_HK
dc.typeArticleen_HK
dc.identifier.emailSin, RG: rays@hku.hken_HK
dc.identifier.authoritySin, RG=rp01618en_HK
dc.description.naturepreprinten_US
dc.identifier.doi10.1287/isre.1090.0264en_HK
dc.identifier.scopuseid_2-s2.0-77957374751en_HK
dc.identifier.hkuros217507-
dc.identifier.hkuros217505-
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-77957374751&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume22en_HK
dc.identifier.issue1en_HK
dc.identifier.spage83en_HK
dc.identifier.epage98en_HK
dc.identifier.isiWOS:000288853700006-
dc.publisher.placeUnited Statesen_HK
dc.identifier.ssrn991156-
dc.identifier.scopusauthoridChellappa, RK=7102623748en_HK
dc.identifier.scopusauthoridSin, RG=23036867300en_HK
dc.identifier.scopusauthoridSiddarth, S=6602839651en_HK

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