Airline Economics: An Empirical Analysis of Market Structure by Giovanni Alberto Tabacco

By Giovanni Alberto Tabacco

This booklet provides an unique empirical research of the industry constitution of airline urban pair markets, laying off new gentle at the workings of aggressive tactics among corporations. analyzing a cross-section folks airline urban pairs, Tabacco proposes for the 1st time that the will be understood as a usual oligopoly, each one airline marketplace being ruled by means of one to 3 airline vendors despite marketplace measurement. the writer questions the level to which airways intentionally hinder head-to-head pageant inside of urban pair markets, and attracts interesting conclusions approximately aggressive forces from the saw marketplace constitution. Uncovering many of the major company innovations of the airline undefined, the ebook is of rapid relevance to managers and practitioners, in addition to educational economists.

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Extra resources for Airline Economics: An Empirical Analysis of Market Structure and Competition in the US Airline Industry

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Journal of Industrial Economics, 36, 131–146. , & Sutton, J. (1990). Multiproduct firms and market structure. RAND Journal of Economics, 21, 45–62. Spence, M. (1977). Entry, capacity, investment and oligopolistic pricing. Bell Journal of Economics, 8, 534–544. Spence, M. (1979). Investment strategy and growth in a new market. Bell Journal of Economics, 10, 1–19. Sutton, J. (1991). Sunk costs and market structure: Price competition, advertising, and the evolution of concentration. Cambridge: MIT Press.

By defining the airline production process as a transformation of labour, fuel, and fleet-wide seating capacity into available seat-miles and interpreting efficiency as the minimisation of the use of those three inputs, Greer (2016) finds that airlines after the mergers occurred between 2005 and 2013 were no more efficient than in the pre-merger situation. However, the author acknowledges the limitation resulting from the small number of airlines in the used sample. Jia Yan et al. (2016) study how mergers 3 MARKET SIZE, FIRM NUMBERS AND MARKET SHARE ASYMMETRY 45 affect airline fares.

Berry (1992, p. 907 footnote 10). Davies et al. (2011) develop and characterize fully the oligopoly triangle and its properties. In Figs. 4 the diamond in the legend actually correspond to a point (S1, S2). I denote with si the market shares of firm i-th. 7. The starting point of Sutton’s (1991) bound approach is to define two broad classes of industries: exogenous sunk costs and endogenous sunk costs industries; then the author develops a theoretical framework for each of the two types of industries in which to analyze the relationship between market size and concentration.

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