This paper investigates the response of full service carriers (FSCs) to theentry of low-cost carriers (LCCs). We develop a model of airline competition, which accommodates various market structures, some ofwhich include low-cost players. Using data on published airfares ofLufthansa, British...

This paper develops a theoretical model for the optimal design of airfare as options under capacity constraint to study the price dispersion in U.S airline industry. Monopoly seller uses a menu of refund contracts to sequentially screen heterogeneous travelers who purchase the tickets before...

Based on two strands of theoretical research, this paper provides new evidence on how fares are jointly affected by in-flight seat availability and purchasing date. As capacity-driven theories predict, it emerges that fares monotonically and substantially increase with the flights occupancy...

Card payment systems are sometimes accused of taking from the poor and giving to the rich. The argument is as follows: High card fees are leading to higher retail prices for both, card users and cash users. However, high income card holders are receiving rewards when purchasing by card. The...