The Impact of ICT on air Transport: A Case Study of China
||26 July 2021
||12:00 PM - 1:30 PM
||Online via Zoom
||For more information, please contact the Graduate Research School.
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Internet has led to a revolutionary change to the air ticket distributions in airline industry. Today most consumers use airlines' official website or online travel agent (OTA) to make bookings. The application of Internet reduces search costs and enhances competition among airlines. Traditional microeconomic theory predicts that enhanced competition will reduce firms' ability to charge a price higher than marginal cost. Therefore Internet should lead to a smaller price dispersion. However empirical evidence shows that interfirm price dispersion can increases with Internet access increases. Price dispersion is related to pricing power, price discrimination and search cost concerning consumers, firms and regulators. Therefore studying the impact of Internet penetration on the price dispersion in airline industry can generate significant policy implications.