Multimarket Contact And Market Power: A Case Of The U.S. Airline Industry
AbstractMany researchers have empirically shown that multimarket contact has had a collusive effect in the U.S. airline industry. This paper empirically analyzes the effect of multimarket contact on air carriers. pricing behaviors and the impact of market power on multimarket contact. We estimated the simultaneous demand and price (pseudo-supply) equations to derive the impacts of multimarket contact by using cross-sectional data of the year 2006 (top 30 U.S. air markets with 4484 sample observations) . We found that multimarket contact increases airfare and that if there are only full-service carriers (FSCs) in a market, the effect of multimarket contact among FSCs is enforced by their preferrence for collusion. However, if there are low-cost carriers (LCCs) in a market, the effect of multimarket contact is not enforced. We also found that in a market where LCCs have dominant market shares, multimarket contact does not necessarily result in carriers. collusive behavior. These results suggest that multimarket contact affects market performances differently depending on whether an LCC exists.
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.
Bibliographic InfoArticle provided by Hitotsubashi University in its journal Hitotsubashi journal of commerce and management.
Volume (Year): 45 (2011)
Issue (Month): 1 (January)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jans, Ivette & Rosenbaum, David I., 1997. "Multimarket contact and pricing: Evidence from the U.S. cement industry," International Journal of Industrial Organization, Elsevier, vol. 15(3), pages 391-412, May.
- Corwin D. Edwards, 1955. "Conglomerate Bigness as a Source of Power," NBER Chapters, in: Business Concentration and Price Policy, pages 331-359 National Bureau of Economic Research, Inc.
- B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
- Fernandez, Nerea & Marin, Pedro L, 1998. "Market Power and Multimarket Contact: Some Evidence from the Spanish Hotel Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 46(3), pages 301-15, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Digital Resources Section, Hitotsubashi University Library).
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.