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

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.