Price Dispersion, Competition, And The Role Of Online Travel Agents

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Price dispersion, competition, and the role of online travel agents: Evidence from business routes in the Italian airline market In this study they use research to further understand what’s driving price dispersion? They investigate very distinct factors between online travel agents and airlines’ direct channels influence price dispersion. Airline markets are characterized by the existence of substantial price dispersion, to be intended as a measure of price variations in the market. Indeed, it is not unusual to see travelers on the same flight paying very different prices for the very same seats. This is due to the fact that airlines are able to distinguish among different types of customers and practice price discrimination, with the help of mechanisms such as advance selling, loyalty programs, nonrefundable tickets, etc. In addition, airline companies typically face uncertain demand with a fixed inventory consisting of very perishable products. Accordingly, they utilize revenue management systems to maximize revenues by dynamically adjusting prices for their seats based on whether the current booking is above or below expected values.The study of price dispersion in the airline industry can provide numerous important implications for firms, consumers and authorities in terms of firms’ pricing power, price discrimination, product differentiation, and reduction of search costs. For this reason, many researchers have devoted themselves to the study of price dispersion in

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