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Investment and regulation: the case of Canadian air carriers

Author

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  • Ouellette, Pierre
  • Petit, Patrick
  • Vigeant, Stéphane

Abstract

We investigate the causes of increasing concentration in the Canadian air carriers industry over the last four decades, and assess possible links with deregulation and investment decisions. We measure the technology of firms in a dynamic framework that includes regulation. The model is tested with data on seven air carriers operating between 1960 and 1999. Traditional technological parameters are recovered: marginal factor productivity, returns to scale, and technical change. We conclude that deregulation only had a slight positive impact on productivity and that it may have contributed to increasing concentration by allowing firms to expand and fully capture returns to scale.

Suggested Citation

  • Ouellette, Pierre & Petit, Patrick & Vigeant, Stéphane, 2005. "Investment and regulation: the case of Canadian air carriers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 41(2), pages 93-113, March.
    • Handle: RePEc:eee:transe:v:41:y:2005:i:2:p:93-113
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    Citations

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    Cited by:

    1. Pierre Ouellette & Stéphane Vigeant, 2000. "A General Procedure to Recover the Marginal Products of a Cost Minimizing Firm," Journal of Productivity Analysis, Springer, vol. 14(2), pages 143-162, September.
    2. Pierre Ouellette & Stéphane Vigeant, 2001. "On the existence of a regulated production function," Journal of Economics, Springer, vol. 73(2), pages 193-200, June.
    3. Ouellette, Pierre & Petit, Patrick & Tessier-Parent, Louis-Philippe & Vigeant, Stéphane, 2010. "Introducing regulation in the measurement of efficiency, with an application to the Canadian air carriers industry," European Journal of Operational Research, Elsevier, vol. 200(1), pages 216-226, January.
    4. Tarryn Kille & Paul Bates & Patrick S. Murray, 2013. "Measuring success: the search for assessment criteria in determining the impact of deregulation in regional aviation," International Journal of Aviation Management, Inderscience Enterprises Ltd, vol. 2(1/2), pages 4-34.
    5. Pierre Ouellette & Stéphane Vigeant, 2001. "Cost and Production Duality: The Case of the Regulated Firm," Journal of Productivity Analysis, Springer, vol. 16(3), pages 203-224, November.

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