![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjF1_E5F937t-4Iej0Pu-XcI14-2-woMVUUbzMYu92eZnW1j9lrV1QnJSJMdBe68gLOnpt7uFSh9CjEAvmPjMs9XNmvEWLXtAT8UKgc2SxZaT1aCGbXfJ0dMyEX9irGmoqq5QpD-2xoRhDk/s400/Untitled-1.jpg)
Nice article by two economists from the Boston Fed shows that when Midway Air (green dots) and later Southwest Air (chartreuse dots) entered the Philly<-->Chicago route, United Airlines price dispersion collapsed. Mostly the highest fares came down to close to the lowest. This is consistent with the theory that price discrimination cannot survive in a competitive market. Curiously, ATA entry (blue dots) had a much smaller effect on United prices than Midway or Southwest entry.
No comments:
Post a Comment