People willingly pay different prices for the same goods and the advent of the Internet, which was supposed to provide consumers with more and better information so they could find the best deal, has not changed things.

That finding, from a study comparing US airline tickets, shows that companies are still able to use pricing strategies to brand themselves with their targeted consumers. The everyday low price (EDLP) strategy in particular is surprisingly resilient, even when the prices it offers may not be the lowest available.

Raymond G. Sin of HKUST and his co-authors Ramnath K. Chellapa and S. Siddarth, reach that conclusion by focusing on price dispersion among US airlines. Prices often vary for the same flight because, for instance, leisure and business travellers have different urgency demands and levels of flexibility.

The authors show airlines take advantage of that fact in their pricing strategies, even in an information-rich environment like the Internet. They discern two main strategies: the EDLP strategy, followed by Southwest and JetBlue and targeted at budget-conscious consumers, and HILO/PROMO, followed by most other major airlines, in which prices are generally higher than EDLP but there are offers of time-limited reductions on certain features.

"Such strategies are quite likely to influence the dispersion of prices posted in a market and, if successful, are also likely to affect the dispersion of transacted prices," the authors say.

This is confirmed in their examination of about 500,000 tickets posted and transacted over one quarter in 2004. Even for prices posted online, where consumers supposedly should be able to compare more easily, price dispersion remains, fuelled by pricing strategies.

The authors find price dispersion generally increases for both types of strategies closer to departure dates and under certain market conditions, such as greater concentration, longer flight distance, greater flight frequency and route structure.

But dispersion is reduced when EDLP carriers are present on a route as other airlines respond by lowering the range of their prices.

The findings are supported in both posted and transacted prices, and online and offline (although there is evidence that some offline prices may be less dispersed than online ones).

The online finding suggests that belief in the power of the Internet to reduce price dispersion - and therefore consumer information asymmetry - is misplaced. The authors point out that EDLP airlines only offer the lowest prices about 50 per cent of the time, indicating they have successfully manipulated their price image not only based on low price but on consistency.

"Decreased search costs online could potentially lead EDLP airlines to be found out but, in contrast, our research shows EDLP prices do clear in the marketplace, suggesting price-format strategies do work even in online markets," they say.

"This has significant practical implications in terms of how managers may formulate their price image by focusing on certain dimensions of their prices when communicating with the customers. Our research also has theoretical implications because it enriches the understanding of the effects of a portfolio pricing strategy on the dynamics of prices in the airlines market, in which prices are highly volatile on the one hand, while consumers are also highly empowered by price comparison tools (such as online travel agents) on the other."

The authors suggest other vendors that practice EDLP strategies, such as Wal-Mart, would be wise not to significantly align their online practices to compete with exclusively online retailers such as Amazon.com, as this could facilitate direct comparisons. EDLP airlines already do this by not listing with online travel agencies.