Saturday, April 30, 2011

Determinants of airfares

An interesting piece on the determinants of airfares.

Just ignore all the bits about what is "fair" or not. There is no real normative question here, but the positive question surely warrants attention. More narrowly, the author seems not to understand that the high airfares in small places such as, to use a personal example, London, Ontario, are implicitly reflected in local wages and house prices as part of the grand general equilibrium of mobility that sorts people and firms among places.

Via: Economist Gulliver blog; here is the original Gulliver post.

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