Tag Archive for: Newsletter August

In the paper entitled: “Does competition reduce price dispersion? New evidence from the airline industry”, Gerardi and Shapiro, financial economists from the Federal Reserve Bank of Atlanta and the Bureau of Economic Analysis, respectively, investigated how competition affects the dispersion and discrimination of airline prices. Price dispersion is an economics term that refers to the fluctuation of prices across markets and sellers of identical items. The difference between price discrimination and dispersion is that the former refers to a situation when a single seller charges different customers different prices for an identical product, while the latter involves multiple sellers that charge different prices for the same product.