Sensitivity of prices to demand shocks: a natural experiment in the San Francisco Bay area

Bilotkach, Volodymyr, Gorodnichenko, Yuriy and Talavera, Oleksandr (2012) Sensitivity of prices to demand shocks: a natural experiment in the San Francisco Bay area. Transportation Research Part A: Policy and Practice, 46 (7). pp. 1137-1151. ISSN 0965-8564

Full text not available from this repository. (Request a copy)
Official URL: http://dx.doi.org/10.1016/j.tra.2012.02.018

Abstract

We analyze the impact of a freeway interchange collapse in the San Francisco Bay Area on the difference in airfare quotes for travel into the area’s main airports. The incident temporarily made Oakland airport a less attractive choice for traveling to San Francisco, so we hypothesize that fares for travel into Oakland will be relatively lower while the freeway interchange was out of service. We test our contention using a sample of fare quotes collected on-line, and find the expected effect of a magnitude of 6–7%. Our results imply the following important conclusions. First, the demand-side shock was well absorbed by the supply side. Second, adjustment of prices and return to the status quo once the shock vanished was swift.

Item Type: Article
Uncontrolled Keywords: Natural experiment, demand shocks, congestion, price stability
Subjects: L100 Economics
N300 Finance
N900 Others in Business and Administrative studies
Department: Faculties > Business and Law > Newcastle Business School > Business and Management
Depositing User: Helen Pattison
Date Deposited: 23 May 2012 14:36
Last Modified: 10 Aug 2015 10:59
URI: http://nrl.northumbria.ac.uk/id/eprint/7361

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics


Policies: NRL Policies | NRL University Deposit Policy | NRL Deposit Licence