Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Wednesday, August 29, 2012

Price Effects and Switching Costs of Airlines Frequent Flyer Program

Posted by D. Daniel Sokol

Claudio A. Agostini, Universidad Adolfo Ibanez Diego Inostroza, Manuel Willington, Universidad Alberto Hurtado discuss Price Effects and Switching Costs of Airlines Frequent Flyer Program.

ABSTRACT: Frequent flier programs create a switching cost for the consumer and allow firms to exercise market power. In Chile there is a dominant airline in domestic markets that has a frequent flyer program with a large number of affiliates and it faces some competition from two small carriers that do have a frequent flyer program. Using a unique dataset for Chile we estimate the switching cost of each airline and the impact of the dominant airline frequent flyer program on prices. The results show a fare premium of around 18% due to the frequent flyer program.

http://lawprofessors.typepad.com/antitrustprof_blog/2012/08/price-effects-and-switching-costs-of-airlines-frequent-flyer-program.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef016768d35ad3970b

Listed below are links to weblogs that reference Price Effects and Switching Costs of Airlines Frequent Flyer Program:

Comments

Post a comment