Distribution of Airline Tickets: A Tale of Two Market Structures

We analyze a sample of fare quotes, collected from the three leading on-line travel agents on fifty large US airline markets. Looking at the lowest fares available, we determine competition between the travel agents ensures the consumer can get a better deal. The travel agents compete more on those airline markets which are less competitive. Also, we find individual agents appear to discriminate for or against individual airlines when deciding whether or not to report airlines' lowest offered fare quotes. As different agents discriminate for/against different airlines, we conjecture that what we observe resembles a 'market-sharing' arrangement.