a b s t r a c tData envelopment analysis is used to examine inter-temporal and peer group airline efficiency. Results for the US for 1985-2006 indicate that airline performance is converging over time. In particular, airlines inter-temporal inefficiency peaked earlier and then converged. Furthermore, using Tobit specifications it is seen that while demand intensity matters less in determining airlines inter-temporal inefficiency, their influence is stronger in determining peer group inefficiency. Block time, a representative of operational factors, tends to negatively impact airlines efficiency by imposing burdens on airline operations. Among the structural cost and revenue factors, fuel cost tends to affect inter-temporal inefficiency more robustly than it does to peer group efficiency. Labor pay tends to reduce inefficiency in case of inter-temporal while increasing peer group inefficiency. The events of September 11th had little or no impact on intertemporal inefficiency but tended to reduce peer group inefficiency in a significant way. Finally, airlines efficiency tends to be robustly affected by block hours; reducing them increases efficiency.

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The air transportation industry in the US has undergone significant restructuring since 2001. While adjustments in costs have been the focus of the industry, changes in the demand structure have also occurred. This paper analyses the structure and dynamics of the origin and destination of core air travel market demand using 1995-2006 US quarterly time-series data. Despite the industry consolidating its network following the terrorist attacks of 2001, passenger travels in core markets have exhibited strong growth in recent years. This increase was driven mostly by the gains in the larger markets. When segmented by types of markets, super-thin markets are seen to have lost services while other markets gained. A majority of passengers use the thick markets that account for only a small portion of all markets and their demand has continued to grow. Relatively fewer passengers fly in the thin and super-thin markets, but they account for a substantial portion of all markets. Empirical estimates align well with the events and adjustments that have been experienced during the time series we examined. Published by Elsevier Ltd.

We extend existing nonparametric methods of analyzing production efficiency to allow some inputs to be quasi-fixed. Varian's Weak Axiom of Cost Minimization is modified to derive the Weak Axiom of Variable Cost Minimization. The methodology is applied to farm level data from West Bengal, India, which are analyzed for consistency with cost minimizing behavior. There is strong evidence against overall cost minimization, a result that cannot be rationalized in terms of production uncertainty and risk aversion. However, violation of either technical efficiency or of variable cost minimization is much less serious. This suggests that failure of cost minimization is principally due to imperfections in the markets for capital and land.Most recent applied studies of production technologies use some form of the neoclassical theory of duality. The essence of duality theory is that, if the production function satisfies fairly general assumptions such as (weak) monotonicity and (quasi)concavity, interesting features of the production technology can be inferred either from the production function or from the indirect objective (e.g., dual cost) function. Apart from regularity conditions on technology, neoclassical duality theory also assumes optimizing behavior as well as perfectly competitive input and output markets. The latter assumptions usually are treated as maintained hypotheses and statistical tests about returns to scale, rates of technical progress, separability between groups of inputs, and other technology features are performed conditionally.However, doubts have been expressed whether neoclassical model of an optimizing competitive firm is valid in traditional agriculture in a less Subhash C. Ray is professor of economics, University of Connecticut. Storrs. Dipasis Bahdra is research economist, Regional Economic Studies Program, University of Baltimore.We are indebted to Kathleen Segerson and three anonymous referees for valuable comments and suggestions for improvement. We also thank Samar Datta for his help in providing access to the data. Responsibility for remaining errors rests on the authors.Review coordinated by Steven Buccola. developed country. I In the present study we examine the assumption of cost minimizing behavior in Indian agriculture. We employ nonparametric methods of production analysis developed by Afriat, Hanoch and Rothschild, Diewert and Park an , Varian, and others. While nonparametric methods have been applied previously to test neoclassical theory, we give here the first application of the methodology in a less developed country. 2 In particular, we use farmlevel input (price and quantity), output (quantity), and expenditure data from a sample of rice producers from West Bengal, India and examine the consistency of the observed data with competitive cost-minimizing behavior."Previous nonparametric studies of cost-minimization have assumed that all inputs are vari-I Different tests of "economic rationality" have been devised and applied by Wise and Yotopoulos, Youtopoulos and others. Juna...

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