Internet Penetration and Capacity Utilization in the US Airline Industry
- 1 November 2014
- journal article
- Published by American Economic Association in American Economic Journal: Microeconomics
- Vol. 6 (4), 106-137
- https://doi.org/10.1257/mic.6.4.106
Abstract
Airline capacity utilization increased dramatically between 1993 and 2007, after staying fairly level following deregulation in 1978. We argue that consumers' use of the Internet to investigate and purchase airline tickets reduces market frictions and allows airlines to meet demand with less capacity and higher load factors. We find that differences in the rate of change of metropolitan-area Internet penetration are positively correlated with differences in the rate of change of airlines' airport-pair load factors. Consistent with our explanation, this correlation is greater on flights in more competitive markets and on flights with fewer total passengers. (JEL L11, L86, L93, M15)Keywords
This publication has 32 references indexed in Scilit:
- Tracing the Woes: An Empirical Analysis of the Airline IndustryAmerican Economic Journal: Microeconomics, 2010
- PRICE DISPERSION IN THE SMALL AND IN THE LARGE: EVIDENCE FROM AN INTERNET PRICE COMPARISON SITEJournal of Industrial Economics, 2004
- Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online BooksellersManagement Science, 2003
- Does the Internet Make Markets More Competitive? Evidence from the Life Insurance IndustryJournal of Political Economy, 2002
- Price Dispersion and Differentiation in Online Travel: An Empirical InvestigationManagement Science, 2002
- Prices and Price Dispersion on the Web: Evidence from the Online Book IndustryJournal of Industrial Economics, 2001
- Frictionless Commerce? A Comparison of Internet and Conventional RetailersManagement Science, 2000
- Automobile Prices in Market EquilibriumEconometrica, 1995
- Hubs and High Fares: Dominance and Market Power in the U.S. Airline IndustryThe RAND Journal of Economics, 1989
- Peak-Load PricingThe Journal of Business, 1960