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Market Forces and Commercial Aircraft Safety

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  • Chalk, Andrew J

Abstract

This paper investigates the wealth impact on aircraft manufacturers of crashes involving their aircraft. The author attempts to separate out the regulatory, tort law, and endogenous market components of these costs using stock market data. The results indicate that on average the manufacturer suffers a wealth loss of $21.3 million as the result of a fatal crash in which the structural integrity of the aircraft is at issue. The analysis suggests that not all of this amount can be attributed to regulatory or tort law mechanisms, and that market forces play a role in providing air travel safety. Copyright 1987 by Blackwell Publishing Ltd.

Suggested Citation

  • Chalk, Andrew J, 1987. "Market Forces and Commercial Aircraft Safety," Journal of Industrial Economics, Wiley Blackwell, vol. 36(1), pages 61-81, September.
  • Handle: RePEc:bla:jindec:v:36:y:1987:i:1:p:61-81
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    References listed on IDEAS

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    1. Richard E. Just & Wen S. Chern, 1980. "Tomatoes, Technology, and Oligopsony," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 584-602, Autumn.
    2. Iwata, Gyoichi, 1974. "Measurement of Conjectural Variations in Oligopoly," Econometrica, Econometric Society, pages 947-966.
    3. Davidson, Carl & Martin, Lawrence W, 1985. "General Equilibrium Tax Incidence under Imperfect Competition: A Quantity-setting Supergame Analysis," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1212-1223, December.
    4. Appelbaum, Elie, 1979. "Testing price taking behavior," Journal of Econometrics, Elsevier, pages 283-294.
    5. Gollop, Frank M. & Roberts, Mark J., 1979. "Firm interdependence in oligopolistic markets," Journal of Econometrics, Elsevier, pages 313-331.
    6. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, pages 287-299.
    7. Lafontaine, Francine & White, Kenneth J., 1986. "Obtaining any Wald statistic you want," Economics Letters, Elsevier, pages 35-40.
    8. Robert L. Bishop, 1968. "The Effects of Specific and Ad Valorem Taxes," The Quarterly Journal of Economics, Oxford University Press, pages 198-218.
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