TY - JOUR
T1 - Sensitivity of prices to demand shocks
T2 - a natural experiment in the San Francisco Bay Area
AU - Bilotkach, V.
AU - Gorodnichenko, Y.
AU - Talavera, O.
PY - 2012/8
Y1 - 2012/8
N2 - 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.
AB - 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.
KW - Natural experiment
KW - Price stability
KW - Demand shocks
KW - Congestion
UR - http://www.scopus.com/inward/record.url?eid=2-s2.0-84862126866&partnerID=MN8TOARS
U2 - 10.1016/j.tra.2012.02.018
DO - 10.1016/j.tra.2012.02.018
M3 - Article
SN - 0965-8564
VL - 46
SP - 1137
EP - 1151
JO - Transportation Research. Part A: Policy & Practice: an international journal
JF - Transportation Research. Part A: Policy & Practice: an international journal
IS - 7
ER -