Heterogeneous price effects and increased price dispersion from quantity-based congestion management

Sunhyung Lee, Zexuan Liu, Haojun Yu

Research output: Contribution to journalArticlepeer-review

Abstract

We examine the effects of quantity-based approaches to airport congestion management such as slot restrictions on price dispersion and on-time performance. From the evidence at Newark Liberty International Airport, we find that slot restrictions increase price dispersion and improve on-time performance. Price dispersion originates from heterogeneous price effects, as ticket prices for high-value passengers increase more than that for low-value passengers. Our novel finding is that the share of passengers who have purchased tickets at a top-end price increase despite the price hike. We use various empirical specifications and an analysis on leads and lags of the policy for robustness.

Original languageEnglish
Pages (from-to)1378-1402
Number of pages25
JournalEconomic Inquiry
Volume59
Issue number3
DOIs
StatePublished - Jul 2021

Keywords

  • airlines
  • airport congestion
  • on-time performance
  • price dispersion
  • slot controls

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