Profitability and Product Quality: Economic Determinants of Airline Safety Performance
AbstractThis study investigates product safety choices in the airline industry, with particular attention to the role of financial conditions. The analysis uses data on thirty-five large scheduled passenger airlines over the 1957-86 period to estimate the effect of profitability and other aspects of financial health on accident and incident rates. The results indicate that lower profitability is correlated with higher accident and incident rates, particularly for smaller carriers. These findings support a broad class of theoretical models that suggest links between financial conditions and product quality, and may have significant implications for the allocation of safety inspection and enforcement resources. Copyright 1990 by University of Chicago Press.
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 98 (1990)
Issue (Month): 5 (October)
Contact details of provider:
Web page: http://www.journals.uchicago.edu/JPE/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Dionne, G. & Gagne, R. & Gagnon, F. & Vanasse, C., 1994.
"Debts, moral hazard and airline safety : an empirica evidence,"
CEPREMAP Working Papers (Couverture Orange)
- Dionne, Georges & Gagne, Robert & Gagnon, Francois & Vanasse, Charles, 1997. "Debt, moral hazard and airline safety An empirical evidence," Journal of Econometrics, Elsevier, vol. 79(2), pages 379-402, August.
- Dionne, G. & Gagne, R. & Gagnon, F. & Vanasse, C., 1993. "Debt, Moral Hazard and Airline Safety : An Empirical Evidence," Cahiers de recherche 9309, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Kjell Hausken, 2013. "Exchange of goods while investing into production and safety," Operations Research and Decisions, Wroclaw University of Technology, Institute of Organization and Management, vol. 1, pages 29-35.
- Nancy L. Rose, 1991.
"Fear of Flying? Economic Analysis of Airline Safety,"
NBER Working Papers
3784, National Bureau of Economic Research, Inc.
- Nancy L. Rose, 1992. "Fear of Flying? Economic Analysis of Airline Safety," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 75-94, Spring.
- Shao, Pei-Chi & Chang, Yu-Hern & Chen, Hubert J., 2013. "Analysis of an aircraft accident model in Taiwan," Journal of Air Transport Management, Elsevier, vol. 27(C), pages 34-38.
- Gordon M. Phillips & Giorgo Sertsios, 2011. "How Do Firm Financial Conditions Affect Product Quality and Pricing?," NBER Working Papers 17233, National Bureau of Economic Research, Inc.
- Jennifer Brown & David A. Matsa, 2012. "Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms," NBER Working Papers 18208, National Bureau of Economic Research, Inc.
- Squalli, Jay, 2009. "Restorative advertising in the airline sector," Journal of Air Transport Management, Elsevier, vol. 15(1), pages 47-51.
- David A. Matsa, 2011. "Running on Empty? Financial Leverage and Product Quality in the Supermarket Industry," American Economic Journal: Microeconomics, American Economic Association, vol. 3(1), pages 137-73, February.
- Chang, Yu-Hern & Yeh, Chung-Hsing, 2004. "A new airline safety index," Transportation Research Part B: Methodological, Elsevier, vol. 38(4), pages 369-383, May.
- Haunschild, Pamela & Ni, Bilian, 2000. "Learning from Complexity: Effects of Accident/Incident Heterogenity on Airline Learning," Research Papers 1621, Stanford University, Graduate School of Business.
- Wang, Zuozheng & Hofer, Christian & Dresner, Martin E., 2013. "Financial condition, safety investment and accident propensity in the US airline industry: A structural analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 49(1), pages 24-32.
- Betancor, Ofelia & Rendeiro, Robert, 1999. "Regulating privatized infrastructures and airport services," Policy Research Working Paper Series 2180, The World Bank.
- Keeler, Theodore E., 1993. "Highway Safety, Economic Behavior, and Driving Environment," University of California Transportation Center, Working Papers qt9c27z2z1, University of California Transportation Center.
- Morrison, Steven A. & Winston, Clifford, 2008. "The effect of FAA expenditures on air travel delays," Journal of Urban Economics, Elsevier, vol. 63(2), pages 669-678, March.
- Montserrat Guillen & Manuel Artis, 1994.
"Count Data Models For A Credit Scoring System,"
Risk and Insurance
- Oster, Clinton V. & Strong, John S. & Zorn, C. Kurt, 2013. "Analyzing aviation safety: Problems, challenges, opportunities," Research in Transportation Economics, Elsevier, vol. 43(1), pages 148-164.
- Chen, Yongmin & Gayle, Philip, 2013. "Mergers and Product Quality: Evidence from the Airline Industry," MPRA Paper 51238, University Library of Munich, Germany.
- Raghavan, Sunder & Rhoades, Dawna L., 2005. "Revisiting the relationship between profitability and air carrier safety in the US airline industry," Journal of Air Transport Management, Elsevier, vol. 11(4), pages 283-290.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).
If references are entirely missing, you can add them using this form.