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On the Extent to which the Presence of Intermediate-stop(s) Air Travel Products Influences the Pricing of Nonstop Air Travel Products

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  • Gayle Philip G.

    (Department of Economics, Kansas State University, 320 Waters Hall, Manhattan, KS 66506)

  • Wu Chi-Yin

    (Department of Economics, Feng Chia University, 100 Wenhwa Rd., Seatwen, Taichung, Taiwan, 40724)

Abstract

Analysts of air travel markets, which include antitrust authorities, are interested in understanding the extent to which the presence of intermediate stop(s) products influences the pricing of nonstop products. This paper uses a structural econometric model to investigate the potential pricing interdependence between these two product types in domestic air travel markets. Counterfactual experiments using the estimated model suggest that in many (but far from a majority) markets the current prices of nonstop products are at least 5% lower than they would otherwise be owing to the presence of intermediate-stop(s) products.

Suggested Citation

  • Gayle Philip G. & Wu Chi-Yin, 2014. "On the Extent to which the Presence of Intermediate-stop(s) Air Travel Products Influences the Pricing of Nonstop Air Travel Products," Review of Network Economics, De Gruyter, vol. 13(3), pages 355-395, September.
    • Handle: RePEc:bpj:rneart:v:13:y:2014:i:3:p:355-395:n:5
    DOI: 10.1515/rne-2015-0023
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    Cited by:

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    3. Philip G. Gayle & Xin Xie, 2018. "Entry Deterrence And Strategic Alliances," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1898-1924, July.
    4. Zakharenko, Roman & Luttmann, Alexander, 2023. "Downsizing the jet: A forecast of economic effects of increased automation in aviation," Transportation Research Part B: Methodological, Elsevier, vol. 170(C), pages 25-47.

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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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