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Measuring competition in civil aviation

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  • Lijesen, Mark G.
  • Nijkamp, Peter
  • Rietveld, Piet

Abstract

Markets in civil aviation are characterized by large differences in the level of competition, both between time periods as between regions. To measure competition, several indicators are available, such as the number of competitors, the C4-index and the Herfindahl index. We use these measures in simulations of events that influence the level of competition, such as growing market shares, entry and merger. We find that there are events where different measures lead to different outcomes, not only in magnitude but also in sign. Competition indicators should be used with caution and attention should be devoted to the definition of the market and the importance of imperfect substitutes. The simultaneous use of several indicators, along with economic intuition and common sense reduces the risks involved.

Suggested Citation

  • Lijesen, Mark G. & Nijkamp, Peter & Rietveld, Piet, 2002. "Measuring competition in civil aviation," Journal of Air Transport Management, Elsevier, vol. 8(3), pages 189-197.
    • Handle: RePEc:eee:jaitra:v:8:y:2002:i:3:p:189-197
    DOI: 10.1016/S0969-6997(01)00048-5
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    References listed on IDEAS

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    1. Geroski, P. A., 1983. "Some reflections on the theory and application of concentration indices," International Journal of Industrial Organization, Elsevier, vol. 1(1), pages 79-94, March.
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    Cited by:

    1. David Ramos-Pérez & José Luis Sánchez-Hernández, 2014. "European World Cities and the Spatial Polarisation of Air Transport Liberalisation Benefits," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 105(1), pages 1-29, February.
    2. Yilmazkuday, Hakan, 2021. "Profit margins in U.S. domestic airline routes," Transport Policy, Elsevier, vol. 114(C), pages 245-251.
    3. Dobruszkes, Frédéric, 2009. "Does liberalisation of air transport imply increasing competition? Lessons from the European case," Transport Policy, Elsevier, vol. 16(1), pages 29-39, January.
    4. Maurizio Naldi & Marta Flamini, 2014. "The CR4 index and the interval estimation of the Herfindahl-Hirschman Index: an empirical comparison," Working Papers hal-01008144, HAL.
    5. Fu, Qian & Kim, Amy M., 2016. "Supply-and-demand models for exploring relationships between smaller airports and neighboring hub airports in the U.S," Journal of Air Transport Management, Elsevier, vol. 52(C), pages 67-79.
    6. Khalil Assala & Suela Bylykbashi & Gilles Roehrich, 2021. "How To Measure Competitive Intensity?," Post-Print hal-03381232, HAL.
    7. Zhang, Qiong & Yang, Hangjun & Wang, Qiang & Zhang, Anming & Zhang, Yahua, 2020. "Impact of high-speed rail on market concentration and Lerner index in China's airline market," Journal of Air Transport Management, Elsevier, vol. 83(C).
    8. Zhang, Qiong & Yang, Hangjun & Wang, Qiang & Zhang, Anming, 2014. "Market power and its determinants in the Chinese airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 64(C), pages 1-13.
    9. Maurizio Naldi & Marta Flamini, 2018. "Dynamics of the Hirschman–Herfindahl Index under New Market Entries," Economic Papers, The Economic Society of Australia, vol. 37(3), pages 344-362, September.
    10. Abate, Megersa, 2016. "Economic effects of air transport market liberalization in Africa," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 326-337.
    11. Malighetti, Paolo & Redondi, Renato & Salanti, Andrea, 2014. "Competitive vs. monopolistic routes: Are fares so different?," Research in Transportation Economics, Elsevier, vol. 45(C), pages 3-8.
    12. Kwieciński Dariusz, 2017. "Measures of Competitive Intensity – Analysis Based on Literature Review," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 25(1), pages 53-77, March.
    13. Maurizio Naldi & Marta Flamini, 2017. "Censoring and Distortion in the Hirschman–Herfindahl Index Computation," Economic Papers, The Economic Society of Australia, vol. 36(4), pages 401-415, December.
    14. Jamie Chen, 2015. "Demand Determinants of Cruise Tourism in Competitive Markets: Motivation, Preference, and Intention," ERSA conference papers ersa15p1190, European Regional Science Association.
    15. Berrittella, Maria & La Franca, Luigi & Zito, Pietro, 2009. "An analytic hierarchy process for ranking operating costs of low cost and full service airlines," Journal of Air Transport Management, Elsevier, vol. 15(5), pages 249-255.
    16. Yusak Susilo & Kay Axhausen, 2014. "Repetitions in individual daily activity–travel–location patterns: a study using the Herfindahl–Hirschman Index," Transportation, Springer, vol. 41(5), pages 995-1011, September.
    17. Jin-Ru Yen & Jing-Cing Chen & Dong-Hua Wang, 2008. "The Change in Structure of Taiwan's Domestic Air Market before and after Deregulation," Transportation Planning and Technology, Taylor & Francis Journals, vol. 31(6), pages 663-679, September.

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