Price dispersion and differentiation in online travel: An empirical investigation
Open accessAbstract
Previous research has examined whether price dispersion exists in theoretically highly efficient Internet markets. However, much of the previous work has been focused on industries with low cost and undifferentiated products. In this paper, we examine the presence of price dispersion and product differentiation using data on the airline ticket offerings of online travel agents (OTAs). We find that different OTAs offer tickets with substantially different prices and characteristics when given the same customer request. Some of this variation appears to be due to product differentiation—different OTAs specialize by systematically offering different trade-offs between ticket price and ticket quality (minimizing the number of connections, matching requested departure and return time). However, even after accounting for differences in ticket quality, ticket prices vary by as much as 18% across OTAs. In addition, OTAs return tickets that are strictly inferior to the ticket offered by another OTA for the same request between 2.2% and 28% of the time. Overall, this suggests the presence of both price dispersion and product differentiation in the online travel market.
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Integrity signals
Registry
Cites
Statistics
Claims the paper makes
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Claims other papers make about this one
Each is checked against this paper’s own text: does it say what the citing paper says it does?
Research found substantial price dispersion for domestic airline tickets offered by online travel agents in the US where the average price was lower than traditional travel agents.
“Research found substantial price dispersion for domestic airline tickets offered by online travel agents in the US where the average price was lower than traditional travel agents (Brynjolfsson & Smith, 2000;Clemons et al., 2002).”
From Progress in information technology and tourism management: 20 years on and 10 years after the Internet—The state of eTourism research (2008) · cites this paper as Clemons et al., 2002
The Abstract and Introduction report substantial price dispersion among online travel agents, and the study’s ticket requests were for travel entirely within the U.S. (data notes). The Introduction says requests were drawn from a traditional agent’s travel patterns, but the cited passages compare prices among online agents, not their average price with traditional agents. (LLM, conf=0.87)
Experimental — accuracy not yet measured
Self-check
Percentages, sums and reported differences re-computed from the paper’s own numbers.
The self-check needs the paper’s full text.
Cites
A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity
White, H. (1980) · Econometrica · doi:10.2307/1912934 · Cited by 25,861 · see citing works
Stigler, G. J. (1961) · Journal of Political Economy · doi:10.1086/258464 · Cited by 5,263 · see citing works
Stigler, G. J. (1976) · Lecture notes in economics and mathematical systems · doi:10.1007/978-3-642-51565-1_86 · Cited by 3,340 · see citing works
Electronic markets and electronic hierarchies
Malone, T. W., Yates, J., & Benjamin, R. I. (1987) · Communications of the ACM · doi:10.1145/214762.214766 · Cited by 3,005 · see citing works
Frictionless commerce? A comparison of Internet and conventional retailers
Brynjolfsson, E., & Smith, M. D. (2000) · Management Science · doi:10.1287/mnsc.46.4.563.12061 · Cited by 2,498 · see citing works
Reducing buyer search costs: Implications for electronic marketplaces
Bakos, J. Y. (1997) · Management Science · doi:10.1287/mnsc.43.12.1676 · Cited by 2,259 · see citing works
A Strategic Analysis of Electronic Marketplaces
Bakos, J. Y. (1991) · MIS Quarterly · doi:10.2307/249641 · Cited by 1,235 · see citing works
Bargains and Ripoffs: A Model of Monopolistically Competitive Price Dispersion
Salop, S. C., & Stiglitz, J. E. (1977) · The Review of Economic Studies · doi:10.2307/2296903 · Cited by 1,008 · see citing works
Electronic markets and virtual value chains on the information super-highway
(1995) · Long Range Planning · doi:10.1016/0024-6301(95)91614-8 · Cited by 823 · see citing works
Hubs and High Fares: Dominance and Market Power in the U.S. Airline Industry
Borenstein, S. (1989) · The RAND Journal of Economics · doi:10.2307/2555575 · Cited by 809 · see citing works
3. Hedonic Price Indexes for Automobiles: An Econometric Analysis of Quality Change
Griliches, Z. (1971) · Harvard University Press eBooks · doi:10.4159/harvard.9780674592582.c4 · Cited by 668 · see citing works
Consumer Decision‐making at an Internet Shopbot: Brand Still Matters
Smith, M. D., & Brynjolfsson, E. (2001) · Journal of Industrial Economics · doi:10.1111/1467-6451.00162 · Cited by 650 · see citing works
Théorie mathématique de la richesse sociale
Walras, L. (1980) · doi:10.5169/seals-258468 · Cited by 489 · see citing works
Do electronic marketplaces lower the price of goods?
Lee, H.-G. (1998) · Communications of the ACM · doi:10.1145/268092.268122 · Cited by 414 · see citing works
Localized Market Power in the U.S. Airline Industry
Evans, W. N., & Kessides, I. N. (1993) · The Review of Economics and Statistics · doi:10.2307/2109627 · Cited by 262 · see citing works
Bertrand, J. (1989) · Cambridge University Press eBooks · doi:10.1017/cbo9780511528231.006 · Cited by 207 · see citing works
The Dominant-Firm Advantage in Multiproduct Industries: Evidence from the U. S. Airlines
Borenstein, S. (1991) · The Quarterly Journal of Economics · doi:10.2307/2937963 · Cited by 186 · see citing works
The Economic Theory of Product Differentiation
Beath, J., & Katsoulacos, Y. (1991) · Cambridge University Press eBooks · doi:10.1017/cbo9780511720666 · Cited by 110 · see citing works
The economic payoff from the internet revolution
Litan, R. E., & Rivlin, A. M. (2001) · Brookings Institution Press eBooks · Cited by 86 · see citing works
Wijnholds, H. W. J. (1957) · South African Journal of Economics · doi:10.1111/j.1813-6982.1957.tb02838.x · Cited by 60 · see citing works
Consumer Decision-Making at an Internet ShopbotPreprint
Smith, M. D., & Brynjolfsson, E. (2001) · SSRN Electronic Journal · doi:10.2139/ssrn.290334 · Cited by 59 · see citing works
Switching cost and brand loyalty in electronic markets: evidence from on-line retail brokers
Chen, P.-Y. S., & Hitt, L. M. (2000) · doi:10.5555/359640.359731 · Cited by 34 · see citing works
Self-citationThe Economic Theory of Product Differentiation.
Myles, G. D., Beath, J., & Katsoulacos, Y. (1992) · The Economic Journal · doi:10.2307/2234310 · Cited by 18 · see citing works
Flagged first, then by citations
Research works printed but not linked: 4
- Chow, G. C. "Technological Change and the Demand for Computers," American Economic Review, Vol. 57, No. 5, December 1967, pp. 1117-1130.
- Combes, G. C. and Patel, J. J. "Creating Lifelong Customer Relationships: Why the Race for Customer Acquisition on the Internet is so Strategically Important," iword, Vol. 2, Issue 4, Hambrecht & Quist 1997.
- Machlis, S. "Profits Elude Travel Sites," Computerworld, December 29, 1997, pp. 53-54.
- Malone, T. W., Yates, J., and Benjamin, R. I. "Electronic Market and Electronic Hierarchies," Communications of the ACM, Vol. 30, No. 6, 1987, pp. 484-497.
Cited by
Sorted by citations
Buhalis, D., & Law, R. (2008) · Tourism Management · doi:10.1016/j.tourman.2008.01.005 · Cited by 3,823 · see citing works
Lamberton, C., & Stephen, A. T. (2016) · Journal of Marketing · doi:10.1509/jm.15.0415 · Cited by 1,127 · see citing works
Brynjolfsson, E., Hu, Y. (., & Simester, D. (2011) · Management Science · doi:10.1287/mnsc.1110.1371 · Cited by 847 · see citing works
Cognitive Lock-In and the Power Law of Practice
Johnson, E. J., Bellman, S., & Lohse, G. L. (2003) · Journal of Marketing · doi:10.1509/jmkg.67.2.62.18615 · Cited by 389 · see citing works
Are online and offline prices similar? Evidence from large multi-channel retailers
Cavallo, A. (2017) · American Economic Review · doi:10.1257/aer.20160542 · Cited by 336 · see citing works
Online and Offline Demand and Price Elasticities: Evidence from the Air Travel Industry
Granados, N., Gupta, A., & Kauffman, R. J. (2012) · Information Systems Research · doi:10.1287/isre.1100.0312 · Cited by 189 · see citing works
Kim, J., Franklin, D., Phillips, M., & Hwang, E. (2020) · Journal of Travel Research · doi:10.1177/0047287519857159 · Cited by 58 · see citing works
Is sibling rivalry good or bad for high technology organizations?
Khoja, F. (2008) · The Journal of High Technology Management Research · doi:10.1016/j.hitech.2008.06.006 · Cited by 10 · see citing works
- Authors
- Clemons, E. K., Hann, I.-H., & Hitt, L. M.
- Affiliations
- University of Pennsylvania (US)
- Carnegie Mellon University (US)
- Venue
- Management Science
- Published
- 2002-04
- Volume
- 48
- Issue
- 4
- Pages
- 534-549
- ISSN
- 0025-1909 (ISSN-L)
- 1526-5501
- OpenAlex
- W2146899871
- Cited by
- 481
- References
- 23
- Citations by year
- 2026: 5 · 2025: 3 · 2024: 10 · 2023: 7 · 2022: 9 · 2021: 9 · 2020: 11 · 2019: 17 · 2018: 11 · 2017: 18 · 2016: 18 · 2015: 18 · 2014: 23 · 2013: 38 · 2012: 24
- FWCI
- 105.89
- Type
- journal article
- Language
- en
- Open access
- green
- repository.upenn.edu
- Locations
- Management Science (publishedVersion)
- ScholarlyCommons (University of Pennsylvania) (submittedVersion)
- Funders
- University of Southern California
- University of Washington
- Carnegie Mellon University
- University of Maryland
- University of Texas at Austin
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
- Social Sciences › Business, Management and Accounting › Marketing › Consumer Market Behavior and Pricing
- Social Sciences › Business, Management and Accounting › Management Information Systems › Supply Chain and Inventory Management
- Keywords
- price dispersion, product differentiation, online travel agencies, airline tickets, internet market
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
Are you an author, or do you see a problem with this page? Request a review
