Localized Market Power in the U.S. Airline Industry

Kessides, Ioannis N.; Evans, William N.

doi:10.2307/2109627

Cited by 204 publications

(125 citation statements)

References 12 publications

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“…We find that Lufthansa, Swissair and Air France charge significant premiums for direct flights from their hubs. Our results for Air France, Swissair and Lufthansa are consistent with those of Borenstein (1989Borenstein ( , 1991, Berry (1990), Evans and Kessides (1993) and Berry, Carnal and Spiller (1996), who also find positive hub premiums.…”

Section: Discussionsupporting

confidence: 88%

Do European Carriers Charge Hub Premiums?

Lijesen

Rietveld

Nijkamp

2004

Networks and Spatial Economics

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Section: Discussionsupporting

confidence: 88%

Do European Carriers Charge Hub Premiums?

Lijesen

Rietveld

Nijkamp

2004

Networks and Spatial Economics

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“…Some examples are the works by Borenstein (1989), Evans and Kessides (1993) or Berry et al (1996), for data at the route level; and the articles by Brander and Zhang (1990), Oum et al (1993), Brueckner and Spiller (1994) or Fisher and Kamerschen (2003), for aggregated data. Results in all these studies are similar: the level of concentration 4 impact should not be very significant.…”

Section: Literature Reviewmentioning

confidence: 99%

When trains go faster than planes: The strategic reaction of airlines in Spain

Jiménez

Betancor

2012

Transport Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractPlans for the development of high speed railways lines (HSR) in Spain are widespread. At the beginning of 2010 four HSR lines were operating in routes where the air transport mode used to be dominant. In this paper we examine through econometric means the air carriers' reaction to these HSR entrances by using data at the route level. We test whether the HSR have changed both, the airlines' frequencies and the market shares. Our results show that it has reduced on average the number of air transport operations by 17 percent. On the other hand the demand has increased substantially, though the weight of air transport in the total market has been reduced, as it has been reduced the weight of the dominant Spanish air carrier Iberia on air markets.

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“…21 See Borenstein (1989) and Evans and Kessides (1993). 22 The list of the MSAs is available from the authors.…”

Section: Market Definitionmentioning

confidence: 99%

Market Structure and Multiple Equilibria in Airline Markets

2009

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We provide a practical method to estimate the payoff functions of players in complete information, static, discrete games. With respect to the empirical literature on entry games originated by Bresnahan and Reiss (1990) and Berry (1992), the main novelty of our framework is to allow for general forms of heterogeneity across players without making equilibrium selection assumptions. We allow the effects that the entry of each individual airline has on the profits of its competitors, its "competitive effects," to differ across airlines. The identified features of the model are sets of parameters (partial identification) such that the choice probabilities predicted by the econometric model are consistent with the empirical choice probabilities estimated from the data.We apply this methodology to investigate the empirical importance of firm heterogeneity as a determinant of market structure in the U.S. airline industry. We find evidence of heterogeneity across airlines in their profit functions. The competitive effects of large airlines (American, Delta, United) are different from those of low cost carriers and Southwest. Also, the competitive effect of an airline is increasing in its airport presence, which is an important measure of observable heterogeneity in the airline industry. Then we develop a policy experiment to estimate the effect of repealing the Wright Amendment on competition in markets out of the Dallas airports. We find that repealing the Wright Amendment would increase the number of markets served out of Dallas Love.

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Localized Market Power in the U.S. Airline Industry

Cited by 204 publications

References 12 publications

Do European Carriers Charge Hub Premiums?

Do European Carriers Charge Hub Premiums?

When trains go faster than planes: The strategic reaction of airlines in Spain

Market Structure and Multiple Equilibria in Airline Markets

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