Demand shifting across flights and airports in a spatial competition model
AbstractThis paper investigates the nature of day-to-day competition between flights using a unique panel data set on prices and inventories. We use instrumental variables methods and several spatial autoregressive models (SAR) to estimate price reaction functions. The primary source of product differentiation is departure time. After controlling for flight-specific characteristics and various sources of price dispersion, we find important evidence of demand shifting between competing flights. Most of the shift is being captured by flights scheduled to depart within a 3-hour window. We find no evidence of demand shifting between airports. Copyright Springer-Verlag 2012
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Bibliographic InfoArticle provided by Springer in its journal Letters in Spatial and Resource Sciences.
Volume (Year): 5 (2012)
Issue (Month): 3 (October)
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Web page: http://www.springer.com/economics/journal/12076
Other versions of this item:
- Escobari, Diego & Lee, Sang-Yeob, 2012. "Demand shifting across flights and airports in a spatial competition model," MPRA Paper 38799, University Library of Munich, Germany.
- L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
- D4 - Microeconomics - - Market Structure and Pricing
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
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