AN ANALYSIS OF PRICE DISCRIMINATION IN THE AIRLINE INDUSTRY
Keywords:
Price discrimination, airline industry, social welfare, demand elasticity, third-degree price discrimination, monopoly, imperfect competition.Abstract
This paper analyzes price discrimination in the airline industry, focusing on its sources, types, and impact on social welfare. The study reviews existing literature and finds that airlines commonly use price discrimination to charge different prices to passengers based on their willingness to pay and demand elasticity. The findings show that third-degree price discrimination is the most widely used form in the airline industry, while evidence of first- and second-degree discrimination is limited. The paper also concludes that price discrimination can increase social welfare and is most effective in imperfectly competitive markets.
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