Nobody downloaded yet

Price Discrimination in the Airline Industry: the Effect of Market Concentration - Term Paper Example

Comments (0) Cite this document
Summary
This paper seeks to investigate, analyze and discuss the various aspects related to price fluctuations in airline industry with regard to market concentration and establishes a relationship between price discrimination and market concentration…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.6% of users find it useful
Price Discrimination in the Airline Industry: the Effect of Market Concentration
Read TextPreview

Extract of sample "Price Discrimination in the Airline Industry: the Effect of Market Concentration"

Download file to see previous pages According to the research findings, it can, therefore, be said that there have been varying opinions about the impact of market concentration on pricing strategies adopted by the firms operating in the airline industry. On one hand, certain theorists use the ceteris paribus clause to explain the phenomenon, claiming that increased market concentration leads to increased instances of price discrimination since the sheer presence of a large number of firms operating in the industry gives immense power in the hands of such firms to implement discriminatory pricing models. While on the other hand, researchers like Borenstein claim that there exists a negative relationship between market concentration and price differentiation, i.e., price discrimination increases as the market competition intensifies e.g. when the market structure undergoes changes from monopoly to imperfect competition. Theoretical analysis carried out by researchers in the recent times, to study the relationship between market concentration and price discrimination, point to the fact that imperfect competition fuels the likelihood of such a wide difference in pricing among firms. Studies show that as a market undergoes a transition from monopolistic market structure towards imperfect competition it has a significant impact on the pricing as well. This happens since prices are highly sensitive towards the form of market and hence more intense the competition, wider the gaps between pricing. In case of monopolistic market structure, the consumers are heterogeneous and hence the firms must segment their markets accordingly in order to cater to their target customers in a better manner. However, as the competition increases, the consumer preferences begin to differ as well. The consumers in a monopolistic market condition differ not only in terms of their tastes and preferences related to a particular product but also differ widely in terms of brand preferences. ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Price Discrimination in the Airline Industry: the Effect of Market Term Paper”, n.d.)
Price Discrimination in the Airline Industry: the Effect of Market Term Paper. Retrieved from https://studentshare.org/marketing/1553111-price-discrimination-in-airline-industry-the-effect-of-market-concentration
(Price Discrimination in the Airline Industry: The Effect of Market Term Paper)
Price Discrimination in the Airline Industry: The Effect of Market Term Paper. https://studentshare.org/marketing/1553111-price-discrimination-in-airline-industry-the-effect-of-market-concentration.
“Price Discrimination in the Airline Industry: The Effect of Market Term Paper”, n.d. https://studentshare.org/marketing/1553111-price-discrimination-in-airline-industry-the-effect-of-market-concentration.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Price Discrimination in the Airline Industry: the Effect of Market Concentration

Airline industry

...?The airline industry is one of the most powerful industries in the world. In this industry generated $712 billion in sales in the US and 986billion worldwide (Plunkett Research). The demand and supply of airline tickets varies a lot by season. In the good season which is Christmas and summer the demand for airline travels goes up. During this season since the supply cannot keep up with the demand the prices of air travel tickets goes up. During low season the airlines utilize a lower pricing strategy in order to attract more customers. As prices goes down the demand for...
2 Pages(500 words)Coursework

Airline Industry

...showing northward trends throughout the year. The oil prices were reported to about 90 dollar per barrel which represents an increase from its figures in 2009 that was quoted at 62 US Dollars per barrel. Certain other factors that had an impact on the profit margins of the airline industry also include high taxation and fuel surcharge imposed by the governments that has eroded the profit and revenue margins of the participants of the global airline industry (IATA, 2010, p.8). Main Findings Appraisal of airline’s operating environment Market Analysis British Airways is one of the oldest legacy carriers based in London UK....
12 Pages(3000 words)Dissertation

The Aviation Industry

...provided they have thorough knowledge of the market and customer preferences (Vedder 2008, p. 123). Despite this, most airline companies neither are in the perfectly competitive market nor are they monopolists. This puts them at a position where they cannot practice proper price discrimination (Barnhart et al. 2009, p. 127). Studies show that price discrimination rises with corresponding increase in the competitiveness of the industry. Some studies also show more presence of price discrimination in a duopoly compared to that in a monopoly (Cento 2008, p. 96). Moreover,...
6 Pages(1500 words)Essay

Airline Industry

...percent to which implies an approximate 5 million euros. (Step stone case study) The company's mission and vision Basically, Lufthansa is an airline founded and based in Germany based. The airline has been unwavering to be one of the international companies that will guide the business inside and also through the 21st century (Gardner, 1996). During 1996, that the corporation was observed up-and-coming from an interlude of enormous transformation. Widespread reformation along with its privatization has at the moment geared up the corporation for a bright and promising opportunity within the exceedingly aggressive airline industry. The lines of attacks that have been...
13 Pages(3250 words)Essay

Price Discrimination

...Demonstrate how the principle of willingness to pay underlies consumer surplus and the practice of price discrimination. Explain the equilibrium solution to an industry that is able to practice perfect price discrimination. Ans: The conception of the consumer's surplus originated from the Marshallian theory of cardinal utility. Hence to establish the relationship between consumer's surplus and willingness to pay we have to go through the theory of cardinal utility and consumer's equilibrium in single commodity case. The cardinal theory of utility is based on the following assumptions. 1. Utility is cardinally measurable. 2. The utility derived from any commodity is measured by the amount of money that the consumer is willing... ...
15 Pages(3750 words)Essay

Market segmentation in the airline industry

...differential pricing and in-flight services according to the price of the seat. Feeder markets can be left to new airlines and the established airlines can concentrate on long-hauls and dense routes. Corporates want more value for money and the leisure market is competitive where price is the prime determinant (5). They are prepared to accept much lower service level for a cheaper price whereas the business traveler is not price conscious and his prime concern is seat availability. Customers are the source of all business growth and hence many companies conduct an...
8 Pages(2000 words)Essay

Airline Industry

...(Holtbrugge & Et. Al., n.d.). In the present situation of fast changing of environment in air transport, the professionals in aviation sector must have access to highly developed and comprehensive knowledge including in-depth understanding of the requirements of the airline industry globally (American Institute of Aeronautics and Astronautics, 2011). The incident of September 11 had certain worst economic effects on the airline industry. This had caused dramatic dropdown in passenger demand as well as high costs to a large extent. However, the industry was facing worst period before as well. Thus, it contributed problem for the...
13 Pages(3250 words)Essay

Price Discrimination in Cinema Market

...price P4. Conclusion The scope and scale of commercial activities in the cinema market have significantly improved over time. The high degree of commercialization in this industry has occurred due to excessive expenditures made by customers. However, without adequate political and legal intervention activities in this industry, some multiplex giants have become potential monopolists in market. These monopolists have actively utilized the effective tool of price discrimination to expand economic surplus base in the market. The context of the paper has elaborated on the case of Golden...
6 Pages(1500 words)Research Paper

Airline Industry

...Airline Industry Executive Summary The European aviation sector is uniquely different from other existing global sectors given the historical, socio-economic and political aspects that have affected the region’s history. Accordingly, varying issues inevitably affect overall competitiveness, cost-effectiveness and target-market capture. From issues of continued deregulation, prime time slots allocation and cost distribution to aspects of market entry and access, short-haul vs. long-haul travel and fleet standardization, all these are factors that must taken into consideration. This entails enhancing overall air travel and market...
4 Pages(1000 words)Assignment

Price Discrimination

...exhausted now have a potential for subsidy that make the resource to have surplus for other use (Patel, 2012) V. Advantages of price discrimination Customers can benefit from research and development as a result of increased revenue that companies earn. In the service industry some of the customers will benefit from low price on off peak time and the firms will benefit on the peak time due to high prices on services and products. Some of the firms will increase in revenues and be able to be a going concern in business and even expand. VI. Disadvantages of price discriminationPrice...
6 Pages(1500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Term Paper on topic Price Discrimination in the Airline Industry: the Effect of Market Concentration for FREE!

Contact Us