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Abstract
Price dispersion refers to the existence of a nondegenerated distribution of prices by the sellers of a product or service with similar features. Price dispersion is a clear reality in the tour operating market, although very little attention has been given to an analysis of this kind of dispersion and price oscillations in package holidays. In this article, the existence of inter- and intrafirm price dispersion and its persistence over time are analyzed. For the purpose of the analysis, a dataset of package holiday prices for the Balearic Islands is used from a sample of British and German tour operators. The results show the existence of persistent differences in the mean prices of tour operators and price distributions with different dispersions and shapes for tour operators and markets. Nevertheless these distributions are not static, showing a swift response to market demands. Although the article is presented as an empirical investigation, the results can be interpreted in the context of theoretical literature on price dispersion.
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