A Dynamic Analysis of the Market for Wide-Bodied Commercial Aircraft
AbstractThis paper uses an empirical dynamic oligopoly model of the commercial aircraft industry to analyse industry pricing, industry performance, and optimal industry policy. A novel feature of the model with respect to the previous literature is that entry, exit, prices, and quantities are endogenously determined in Markov perfect equilibrium (MPE). We find that many unusual aspects of the aircraft data, such as high concentration and persistent pricing below static marginal cost, are explained by this model. We also find that the unconstrained MPE is quite efficient from a social perspective, providing only 10% less welfare on average than a social planner would obtain. Finally, we provide simulation evidence that an anti-trust policy in the form of a concentration restriction would be welfare reducing. Copyright 2004 The Review of Economic Studies Ltd.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Wiley Blackwell in its journal The Review of Economic Studies.
Volume (Year): 71 (2004)
Issue (Month): (07)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0034-6527
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Victor Aguirregabiria & Gustavo Vicentini, 2006.
"Dynamic Spatial Competition Between Multi-Store Firms,"
tecipa-253, University of Toronto, Department of Economics.
- Victor Aguirregabiria & Gustavo Vicentini, 2012. "Dynamic Spatial Competition Between Multi-Store Firms," Working Papers tecipa-457, University of Toronto, Department of Economics.
- Guillermo Caruana & Liran Einav, 2006.
2006 Meeting Papers
16, Society for Economic Dynamics.
- Guillermo Caruana & Liran Einav, 2005. "Production Targets," Discussion Papers 04-032, Stanford Institute for Economic Policy Research.
- Caruana, Guillermo & Einav, Liran, 2005. "Production Targets," Department of Economics, Working Paper Series qt0n71m1ch, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Guillermo Caruana & Liran Einav, 2006. "Production Targets," Working Papers wp2006_0602, CEMFI.
- Guillermo Caruana & Liran Einav, 2006. "Production Targets," NBER Working Papers 11958, National Bureau of Economic Research, Inc.
- Ulrich Doraszelski & Kenneth L. Judd, 2005.
"Avoiding the Curse of Dimensionality in Dynamic Stochastic Games,"
NBER Technical Working Papers
0304, National Bureau of Economic Research, Inc.
- Ulrich Doraszelski & Kenneth L. Judd, 2012. "Avoiding the curse of dimensionality in dynamic stochastic games," Quantitative Economics, Econometric Society, vol. 3(1), pages 53-93, 03.
- Ulrich Doraszelski & Kenneth L. Judd, 2005. "Avoiding the Curse of Dimensionality in Dynamic Stochastic Games," Harvard Institute of Economic Research Working Papers 2059, Harvard - Institute of Economic Research.
- Besanko, David & Doraszelski, Ulrich & Kryukov, Yaroslav & Satterthwaite, Mark, 2007.
"Learning-by-Doing, Organizational Forgetting and Industry Dynamics,"
CEPR Discussion Papers
6160, C.E.P.R. Discussion Papers.
- David Besanko & Ulrich Doraszelski & Yaroslav Kryukov & Mark Satterthwaite, 2007. "Learning-by-Doing, Organizational Forgetting, and Industry Dynamics," Levine's Bibliography 321307000000000903, UCLA Department of Economics.
- David Besanko & Ulrich Doraszelski, 2005. "Learning-by-Doing, Organizational Forgetting, and Industry Dynanmics," Computing in Economics and Finance 2005 236, Society for Computational Economics.
- Gabriel Y. Weintraub & C. Lanier Benkard & Benjamin Van Roy, 2005. "Markov perfect industry dynamics with many firms," Working Paper Series 2005-23, Federal Reserve Bank of San Francisco.
- Cerquera Dussán, Daniel, 2006. "Dynamic R&D incentives with network externalities," ZEW Discussion Papers 06-94, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Gabriel Weintraub & C. Lanier Benkard & Ben Van Roy, 2005. "Markov Perfect Industry Dynamics with Many Firms," NBER Working Papers 11900, National Bureau of Economic Research, Inc.
- Doraszelski, Ulrich & Satterthwaite, Mark, 2007. "Computable Markov-Perfect Industry Dynamics: Existence, Purification, and Multiplicity," CEPR Discussion Papers 6212, C.E.P.R. Discussion Papers.
- Ulrich Doraszelski & Mark Satterthwaite, 2007. "Computable Markov-Perfect Industry Dynamics: Existence, Purification, and Multiplicity," Levine's Bibliography 321307000000000912, UCLA Department of Economics.
- Asplund, Björn Marcus, 2007. "A Test of Profit Maximization," CEPR Discussion Papers 6177, C.E.P.R. Discussion Papers.
- Maican, Florin G., 2012. "From Boom to Bust and Back Again: A dynamic analysis of IT services," Working Papers in Economics 543, University of Gothenburg, Department of Economics.
- Michael Cohen & Adam Rabinowitz, 2012. "An Empirical Analysis of Equilibrium Pricing and Advertising in the Ready-To-Eat Cereal Market," Working Papers 15, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.