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find some evidence of airline pricing power -- managers opportunistically retain selling prices when fuel costs decrease … commodity cost increases than they enjoy commodity costs decreases. Further, the periods of airline pricing power and consumer … power correlate rationally with the changes in the economic environment within the airline industry. Managers offset margins …
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Empirical evidence suggests that prices are sticky with respect to cost changes. Moreover, prices respond more rapidly to cost increases than to cost decreases. We develop a search theoretic model which is consistent with this evidence and allows for additional testable predictions. Our results...
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