Regulation and Incentives in European Aviation
AbstractThe aim of this Paper is to evaluate simultaneously market power and the incentives faced by carriers to improve efficiency, taking into account the regulatory changes that have affected the European airline industry. We construct and estimate a model that includes demand, capacity, and cost equations. The latter accounts for inefficiency and cost-reducing effort. Using a non-nested test and observations on the largest European airlines between 1985 and 1999, we show the importance of following such an approach. We also find that the introduction of the last EU package of deregulatory measures has affected carriers’ behaviour in a significant manner.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4318.
Date of creation: Mar 2004
Date of revision:
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Other versions of this item:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-13 (All new papers)
- NEP-EEC-2004-06-13 (European Economics)
- NEP-REG-2004-06-13 (Regulation)
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