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Potential Competition in the Deregulated Airlines

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  • Strassmann, Diana L
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    Abstract

    Using a new and unique data set, this paper applies a systems approach to the study of potential competition, prices, and entry relations in airline city-pair markets. Consistent with limit pricing models, future entry is directly influenced by current prices. Current prices thus appear to provide an important signal to potential entrants about the probability of profitable entry. While results indicate the existence of barriers to entry, these barriers appear to have no independent effects on price beyond there effect on actual competition through increases in concentration. Copyright 1990 by MIT Press.

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    Bibliographic Info

    Article provided by MIT Press in its journal Review of Economics & Statistics.

    Volume (Year): 72 (1990)
    Issue (Month): 4 (November)
    Pages: 696-702

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    Handle: RePEc:tpr:restat:v:72:y:1990:i:4:p:696-702

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    Web page: http://mitpress.mit.edu/journals/

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    Web: http://mitpress.mit.edu/journal-home.tcl?issn=00346535

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    Cited by:
    1. Dobruszkes, Frédéric, 2009. "Does liberalisation of air transport imply increasing competition? Lessons from the European case," Transport Policy, Elsevier, vol. 16(1), pages 29-39, January.
    2. Rashmi Banga, 2005. "Role of Services in the Growth Process: A Survey," Indian Council for Research on International Economic Relations, New Delhi Working Papers, Indian Council for Research on International Economic Relations, New Delhi, India 159, Indian Council for Research on International Economic Relations, New Delhi, India.
    3. Bahram Adrangi & Garland Chow & Kambiz Raffiee, 1999. "The Effects of Market Structure and Technology on Airline Fleet Composition after Deregulation," Review of Industrial Organization, Springer, Springer, vol. 15(1), pages 77-88, August.
    4. Michael Keen & Jon Strand, 2007. "Indirect Taxes on International Aviation," Fiscal Studies, Institute for Fiscal Studies, Institute for Fiscal Studies, vol. 28(1), pages 1-41, 03.
    5. Yahua Zhang & David Round, 2009. "Policy Implications of the Effects of Concentration and Multimarket Contact in China’s Airline Market," Review of Industrial Organization, Springer, Springer, vol. 34(4), pages 307-326, June.
    6. Simshauser, Paul, 2001. "Excess Entry in the Deregulated Queensland Power Market," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, Queensland University of Technology (QUT), School of Economics and Finance, vol. 31(1), pages 73-92, March.
    7. Homsombat, Winai & Lei, Zheng & Fu, Xiaowen, 2014. "Competitive effects of the airlines-within-airlines strategy – Pricing and route entry patterns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, Elsevier, vol. 63(C), pages 1-16.

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