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Asymmetric Regulation and Airport Dominance in International Aviation: Evidence from the London-new York Market

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  • Volodymyr Bilotkach

    ()
    (Department of Economics, University of California, Irvine, 3151 Social Science Plaza, Irvine, CA 92697, USA)

Abstract

International airline markets have the rather unusual feature of partial deregulation with asymmetric regulatory constraints: Some carriers face entry restrictions different from others for a given route. Like domestic air travel, international travel also features hubs, where a single carrier may dominate a given airport. This article examines the effects of asymmetric regulation and airport dominance on airlines' fares in the London-New York market, a market uniquely suited for identifying the effects of both of these issues. Comparison data from the symmetrically regulated Frankfurt-New York and Paris-New York markets enable a difference-in-differences identification strategy. Regulatory restrictions are found to decrease an affected carrier's fares, whereas airport dominance increases a dominant airline's fares.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 74 (2007)
Issue (Month): 2 (October)
Pages: 505-523

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Handle: RePEc:sej:ancoec:v:74:2:y:2007:p:505-523

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Web page: http://www.southerneconomic.org/
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Cited by:
  1. Volodymyr Bilotkach & Yuriy Gorodnichenko & Oleksandr Talavera & Igor Zubenko, 2006. "Are Airlines' Price-Setting Strategies Different?," Discussion Papers of DIW Berlin 645, DIW Berlin, German Institute for Economic Research.
  2. Bilotkach, Volodymyr & Lakew, Paulos Ashebir, 2014. "On sources of market power in the airline industry: Panel data evidence from the US airports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 288-305.

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