Friday, 8 August 2008

Airline ticket prices

One of the big economic question of the age is
Why do most airlines charge substantially more for a one-way ticket than a round-trip ticket on the same route?
At the Austrian Economists blog three possible answers have been put forward:
  1. It's price discrimination - one-way fliers might need specific times and flights in a way that makes their demand more inelastic.
  2. Some people might pay a premium for a one-way ticket in order to leave their return open-ended.
  3. It's a matter of not wanting an empty seat coming back the other way given the low probability of a "double coincidence of one-way tickets."
None of which seem totally convincing.

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