Rivalry in the U.S. Airline Industry
AbstractIn this paper, we use Market Share Instability (MSI) as a measure of the intensity of competition among airlines on a specific route. This measure is used to capture not only price competition but also non-price competition notably capacity competition. We test the effect of different variables (used in pricing studies) on MSI on a sample of 400 routes over the period 1987 to 1993. Most of the results found in pricing studies are confirmed using this measure of rivalry. For example the presence of a bankrupt carrier increases rivalry but extensive multimarket contact between rivals decreases competition. We also find that MSI was significantly lower in the early nineties when demand conditions were weak. A decline in the intensity of capacity competition could explain that result.
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Bibliographic InfoPaper provided by Université Laval - Département d'économique in its series Cahiers de recherche with number 9603.
Date of creation: 1996
Date of revision:
Other versions of this item:
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
- L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-05-25 (All new papers)
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- Barla, Philippe, 2000.
"Firm size inequality and market power,"
International Journal of Industrial Organization,
Elsevier, vol. 18(5), pages 693-722, July.
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