Demand shifting across flights and airports in a spatial competition model
AbstractThis paper investigates the nature of day-to-day competition between flights using a unique panel data set on prices and inventories. We use instrumental variables methods and several spatial autoregressive models (SAR) to estimate price reaction functions. The primary source of product differentiation is departure time. After controlling for flight-specific characteristics and various sources of price dispersion, we find important evidence of demand shifting between competing flights. Most of the shift is being captured by flights scheduled to depart within a 3-hour window. We find no evidence of demand shifting between airports.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 38799.
Date of creation: 17 Apr 2012
Date of revision:
Spatial Autoregressive Models; Competition; Demand Shifting; Airlines;
Other versions of this item:
- Diego Escobari & Sang-Yeob Lee, 2012. "Demand shifting across flights and airports in a spatial competition model," Letters in Spatial and Resource Sciences, Springer, Springer, vol. 5(3), pages 175-183, October.
- L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
- D4 - Microeconomics - - Market Structure and Pricing
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-22 (All new papers)
- NEP-COM-2012-05-22 (Industrial Competition)
- NEP-GEO-2012-05-22 (Economic Geography)
- NEP-TRE-2012-05-22 (Transport Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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