@article{Richard:207597,
      recid = {207597},
      author = {Richard, David B.},
      title = {The Changing Price Elasticity of Demand for Domestic  Airline Travel},
      address = {2009-03},
      number = {1429-2016-118638},
      pages = {14},
      year = {2009},
      abstract = {Consumers make economic decisions as to what they buy  based largely on price. More specifically, the change in  the amount of a good purchased is often highly dependent on  its change in price. That measure of responsiveness is  defined as the price elasticity of demand. Mathematically,  it is often expressed as: Ed= - percent change in quantity  demanded / percent change in price, or -(dQ/Q)/(dP/P). The  minus sign is often omitted because price elasticity of  demand is presumed to be negative. If Ed = 0, it is  perfectly inelastic, a change in price does not affect the  quantity demanded. If 0 >Ed>-1, it is relatively inelastic,  the quantity demanded does not increase at the same rate  the price falls. If Ed = -1, there is unitary elasticity,  both price and demand change equally. If -1>Ed, it is  elastic, demand increases more than the fall in price. It  is presumed that the changes in price are small. If the  price elasticity of demand is not greater (more negative)  than -1, a drop in price can actually reduce overall  revenue received by the seller. Airline industry observers  have generally assumed that the demand for airline travel  is price elastic. Indeed, one of the primary benefits  expected with airline deregulation was a fall in the fare  level and increased passenger traffic were regulatory price  and service restrictions removed. Economists also generally  view the effect of price changes in inflation-adjusted  terms, e.g. "real" prices. This paper examines the effect  of changes in price on the demand for U.S. domestic air  travel, in both nominal and inflation-adjusted terms. The  paper shows, contrary to general economic belief, that the  overall price elasticity of demand for air travel has been  inelastic (e.g. more positive than -1.0) since the early  1970's in both real and nominal terms. Domestic industry  price elasticity estimates are developed using multiple  linear regression with demand measured in revenue  passenger-miles as the dependent variable and several  selected independent variables (price, the economy,  consumer confidence, and several "dummy" variables). The  paper is divided into four subsections: The Change in Air  Travel Demand, The Regression Model Form, Model Variables,  and Results and Conclusions.},
      url = {http://ageconsearch.umn.edu/record/207597},
      doi = {https://doi.org/10.22004/ag.econ.207597},
}