|
on Transport Economics |
| By: | Volodymyr Bilotkach (Newcastle University, Department of Economics); Nicholas G. Rupp (East Carolina University, Department of Economics); Vivek Pai (University of California, Irvine, and KBB Department of Economics) |
| Abstract: | We approach the issue of the value of a platform to a seller in a two-sided market where both buyers and sellers multi-home. A seller that loses access to a major buyer platform can potentially incur substantial financial losses. We exploit a recent conflict between American Airlines and two leading online travel agencies (Expedia and Orbitz), which dropped American Airlines fare quotes during the first quarter of 2011. We present a simple model of airline ticket distribution. This model provides a framework to analyze the events that happened in the American Airlines – online travel agency conflict. We analyze price data for the first quarter of 2010 and 2011, employing a simple difference-in-differences identification strategy to evaluate changes in American Airlines’ fares. After controlling for across-market heterogeneity, carrier-specific time-invariant effects, and time-specific carrier-invariant effects, American Airlines’ fares during the conflict were 2.7-4.2 percent lower than similar fares charged by American’s main competitors (United, Continental, Delta, and US Airways). The fare effect is most pronounced in the sub-sample of one-stop itineraries, where competition is stronger, and customers are more likely to have to rely on travel agents – rather than carriers’ own web-sites – for flight bookings. In sum, our findings indicate that access to major buyer platforms is considerably valuable to a seller. We estimate that during the first quarter of 2011 the loss of access to the Expedia/Orbitz platforms resulted in over $50 million reduction in revenue for American Airlines. |
| Keywords: | two-sided markets, value of platforms, online travel agents Length: 31 pages |
| JEL: | D4 L4 L93 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1308&r=tre |
| By: | Itai Ater (Recanati Business School, Tel Aviv University); Eugene Orlov (Compass Lexecon); |
| Abstract: | How did the diffusion of the Internet affect performance and product quality in the airline industry? We argue that the shift to online distribution channels has changed the way airlines compete for customers - from an environment in which airlines compete for space at the top of travel agents’ computer screens by scheduling the shortest flights, to an environment where price plays the dominant role in selling tickets. Using flight-level data between 1997 and 2007 and geographical growth patterns in Internet access, we find a positive relationship between Internet access and scheduled flight times. The magnitude of the effect is larger in competitive markets without low-cost carriers and for flights with shortest scheduled times. We also find that despite longer scheduled flight times, flight delays increased as passengers gained Internet access. More generally, these findings suggest that increased Internet access may adversely affect firms' performance and firms’ incentives to provide high quality products. |
| Keywords: | Internet, Search, Air Travel, Quality |
| JEL: | D83 L15 L93 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1307&r=tre |
| By: | Josef Montag (Faculty of Business and Economics, Mendel University in Brno) |
| Abstract: | This study examines short- and long-run effects of a new—stricter—road traffic law on traf- fic accident-related fatalities in the Czech Republic. The law introduced tougher punishments through the introduction of a demerit point system and a manifold increase in fines, together with augmented authority of traffic police. Identification is based on difference-in-differences methodology, with neighbouring countries serving as a control group. I find a sharp, 33.3%, decrease in accident-related fatalities during the first three post-reform months. This trans- lates into 127 saved lives (95% confidence interval: 51, 204). The decline was, however, temporary; the estimates of the effects going beyond the first year are around zero. Unique data on traffic police activity reveal that police resources devoted to traffic law enforcement gradually declined. Tougher penalties have significant, but often short-lived effects. Weaker enforcement in the aftermath of such reforms may explain the absence of long-run effects. |
| Keywords: | traffic law, traffic accidents, demerit point system, law enforcement |
| JEL: | J28 I12 I18 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:men:wpaper:39_2013&r=tre |
| By: | Özgür Bor (Atýlým University, Turkey); Mustafa Ýsmihan (Atýlým University, Turkey) |
| Abstract: | This study analyzes the role of tax policy in gasoline prices in Turkey by utilizing time series techniques. It provides and compares empirical results by using daily gasoline prices between January 2005 and July 2012, with and without the effect of taxation. Our results, based on the standard asymmetric error-correction model, indicate no evidence of asymmetry in retail gasoline prices, which implies that the government does not benefit from the adjustment of gasoline prices through taxation. However, one can miss the big picture in gasoline pricing by concentrating only on the short term price adjustment dynamics via error-correction models. Therefore, we analyzed the long-run relationships between crude oil and gasoline prices with and without taxes. The results indicate that Turkish government succeeded at implicitly imposing an exceptionally high tax burden on gasoline (about 70%) over the longer term by adjusting non-salient excise tax amounts on gasoline and benefited from the resultant tax revenues as means of public finance. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:tek:wpaper:2013/7&r=tre |