Price Mark-Ups and Dispersion for Online Air Tickets: An Empirical Investigation into Scandinavian Online Travel Agencies

Sammanfattning: This essay investigates the prices quoted by online travel agents and airline companies for the same flight tickets. The theory of information and search cost would predict that prices should converge on the internet. This prediction is tested using data from six online travel agents and the airline companies quoted as having the cheapest prices for the corresponding dates and destinations. The results show that online travel agents consistently charge significantly higher prices than the airline companies, with substantial dispersion. This suggests that online search cost is not as low as had previously been assumed, at least for a proportion of searchers.