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Unpublished Paper
Hidden Baggage: Behavioral Responses to Changes in Airline Ticket Tax Disclosure
- (2015)
  • Sebastien J Bradley, Drexel University
  • Naomi Feldman
Abstract
We examine the impact on air travelers of an enforcement action issued by the U.S. Department of Transportation (DOT) in 2012 requiring that domestic air carriers and online travel agents incorporate all mandatory taxes and fees in their advertised fares. Consistent with the literature on tax salience, we find quasi-experimental evidence that the more prominent display of tax-inclusive prices is associated with a reduction in tax incidence on consumers, and this effect varies non-monotonically with market concentration. Ticket revenues are commensurately reduced, while passenger demand and average per-passenger tax revenue between origin and destination airport-pairs likewise decline following the introduction of full-fare advertising.
Keywords
  • tax salience,
  • airlines,
  • ticket taxes,
  • tax incidence
Publication Date
December, 2015
Citation Information
Sebastien J Bradley and Naomi Feldman. "Hidden Baggage: Behavioral Responses to Changes in Airline Ticket Tax Disclosure" - (2015)
Available at: http://works.bepress.com/sebastien_bradley/7/