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Competition in European Aviation: Pricing Policy and Market Structure

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  • Marin, Pedro L
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    Abstract

    The purpose of this paper is to analyze the impact of liberal bilateral agreements on some European air routes in terms of price competition and market structure. The author proposes a model that explains firms' behavior and shows that, after the liberalization, firms exploit their cost advantages and differentiate their products more but market structure still depends on access to airport facilities and other ancillary services controlled by the flag carriers. These results differ from American evidence in that the author finds that the effect of airport presence on prices through lower costs more than offsets the effect through higher perceived quality. Copyright 1995 by Blackwell Publishing Ltd.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Industrial Economics.

    Volume (Year): 43 (1995)
    Issue (Month): 2 (June)
    Pages: 141-59

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    Handle: RePEc:bla:jindec:v:43:y:1995:i:2:p:141-59

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    Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821

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    Cited by:
    1. Gagnepain, Philippe & Marín Uribe, Pedro Luis, 2004. "Regulation and Incentives in European Aviation," CEPR Discussion Papers 4318, C.E.P.R. Discussion Papers.
    2. Pedro L Marin, 1995. "The Remains of Regulation: Airlines Profits After Liberalization," STICERD - Economics of Industry Papers 12, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    3. Bilotkach, Volodymyr & Fageda, Xavier & Flores-Fillol, Ricardo, 2009. "Scheduled Service Versus Personal Transportation: The Role of Distance," Working Papers 2072/15846, Universitat Rovira i Virgili, Department of Economics.
    4. Xavier Fageda, 2006. "Measuring Conduct and Cost Parameters in the Spanish Airline Market," Review of Industrial Organization, Springer, vol. 28(4), pages 379-399, June.
    5. Oliveira, Alessandro V.M, 2003. "The Impacts Of Liberalisation On A Brazilian Air Shuttle Market," The Warwick Economics Research Paper Series (TWERPS) 676, University of Warwick, Department of Economics.
    6. Manuela, Wilfred Jr., 2007. "Airline liberalization effects on fare: The case of the Philippines," Journal of Business Research, Elsevier, vol. 60(2), pages 161-167, February.
    7. Squalli, Jay, 2014. "Airline passenger traffic openness and the performance of Emirates Airline," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(1), pages 138-145.
    8. Carlsson, Fredrik, 2002. "Price and Frequency Choice under Monopoly and Competition in Aviation Markets," Working Papers in Economics 71, University of Gothenburg, Department of Economics.
    9. Damien J. Neven & Lars-Hendrik Röller & Zhentang Zhang, 2002. "Endogenous Costs and Price-Cost Margins," Discussion Papers of DIW Berlin 294, DIW Berlin, German Institute for Economic Research.
    10. Gagnepain, Philippe & Marín Uribe, Pedro Luis, 2005. "Alliances in the Air: Some Worldwide Evidence," CEPR Discussion Papers 5063, C.E.P.R. Discussion Papers.

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