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Equilibrium Airfares, Frequencies and Airport Taxes in a Multiple Airport Region: An Application of the Nested Logit Demand Model

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Author Info

  • Eric Pels

    (Vrije Universiteit Amsterdam)

  • Peter Nijkamp

    ()
    (Vrije Universiteit Amsterdam)

  • Piet Rietveld

    ()
    (Vrije Universiteit Amsterdam)

Abstract

In this paper a model, based on the nested multinomial logit model, is used to analyze airport competition and airline competition in a multiple airport region. It is shown that if the frequency elasticity of demand is smaller than 1, airfare-frequency and airport tax equilibria exist and are unique.Symmetric equilibria are derived analytically and their properties are discussed. Asymmetric equilibria are obtained numerically, and their properties are discussed.

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File URL: http://papers.tinbergen.nl/98073.pdf
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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 98-073/3.

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Date of creation: 09 Jul 1998
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Handle: RePEc:dgr:uvatin:19980073

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Web page: http://www.tinbergen.nl

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References

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  1. Hansen, Mark, 1990. "Airline competition in a hub-dominated environment: An application of noncooperative game theory," Transportation Research Part B: Methodological, Elsevier, vol. 24(1), pages 27-43, February.
  2. Jaibi, M. Raouf & ten Raa, Thijs, 1998. "An asymptotic foundation for logit models," Regional Science and Urban Economics, Elsevier, vol. 28(1), pages 75-90, January.
  3. Eric Pels & Peter Nijkamp & Piet Rietveld, 1998. "Airport Choice in a Multiple Airport Region: An Empirical Analysis for the San Francisco Bay Area," Tinbergen Institute Discussion Papers 98-041/3, Tinbergen Institute.
  4. Pels, Eric & Nijkamp, Peter & Rietveld, Piet, 1997. "Substitution and complementarity in aviation: airports vs airlines," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 33(4), pages 275-286, December.
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Cited by:
  1. Eric Pels & Peter Nijkamp & Piet Rietveld, 1998. "Airport Choice in a Multiple Airport Region: An Empirical Analysis for the San Francisco Bay Area," Tinbergen Institute Discussion Papers 98-041/3, Tinbergen Institute.
  2. repec:dgr:uvatin:2098041 is not listed on IDEAS
  3. repec:dgr:uvatin:1998041 is not listed on IDEAS

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