IDEAS home Printed from https://ideas.repec.org/a/eee/jomega/v30y2002i1p33-44.html
   My bibliography  Save this article

Regulating the domestic air travel in India: an umpire's game

Author

Listed:
  • Bhaumik, P. K.

Abstract

This paper analyses the competitive strategies available to an Indian airline in a scenario where the entry of private domestic airlines has only recently been allowed. The Calcutta-Delhi route is initially analysed as an example--where there are three major players competing. The fare charged by each airline being the same, the number of departures is used as one of the major competitive weapons. Game theory is used here as a useful tool to analyse such situations. The equilibrium behaviour of the airlines is studied and the possibility of the game being played at the focal point is then analysed. All over the world, airlines have had a long history of economic regulation of both their national and international operations with governments often regarding regulation as necessary--both to achieve a comprehensive route network and to achieve stable markets. The game formulated is then analysed from the point of view of the regulating body and it is found that the game-theoretic framework is able to provide powerful insights regarding regulatory interventions. Two types of interventions, viz. fare regulation as well as the introduction of a licence fee per flight, are analysed and their ability to shift the Nash equilibrium to the focal point are studied. Finally, the problem is generalised and some results are obtained which are applicable to any route with any number of operators as long as the basic nature of the competitive situation remains the same. Use of the game-theoretic approach as a powerful tool to decide regulatory interventions is thus highlighted.

Suggested Citation

  • Bhaumik, P. K., 2002. "Regulating the domestic air travel in India: an umpire's game," Omega, Elsevier, vol. 30(1), pages 33-44, February.
  • Handle: RePEc:eee:jomega:v:30:y:2002:i:1:p:33-44
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305-0483(01)00050-0
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Iwata, Gyoichi, 1974. "Measurement of Conjectural Variations in Oligopoly," Econometrica, Econometric Society, vol. 42(5), pages 947-966, September.
    2. Gollop, Frank M. & Roberts, Mark J., 1979. "Firm interdependence in oligopolistic markets," Journal of Econometrics, Elsevier, vol. 10(3), pages 313-331, August.
    3. James A. Brander & Anming Zhang, 1990. "Market Conduct in the Airline Industry: An Empirical Investigation," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 567-583, Winter.
    4. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mendonça, Francisco V. & Catalão-Lopes, Margarida & Marinho, Rui Tato & Figueira, José Rui, 2020. "Improving medical decision-making with a management science game theory approach to liver transplantation," Omega, Elsevier, vol. 94(C).
    2. Alderighi, Marco & Cento, Alessandro & Nijkamp, Peter & Rietveld, Piet, 2005. "Network competition—the coexistence of hub-and-spoke and point-to-point systems," Journal of Air Transport Management, Elsevier, vol. 11(5), pages 328-334.
    3. Marco Alderighi & Alessandro Cento & Peter Nijkamp & Piet Rietveld, 2005. "Network competition - the co-existence of hub-and-spoke and point-to-point," ERSA conference papers ersa05p703, European Regional Science Association.
    4. Adler, Nicole & Pels, Eric & Nash, Chris, 2010. "High-speed rail and air transport competition: Game engineering as tool for cost-benefit analysis," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 812-833, August.
    5. Adler, Nicole & Smilowitz, Karen, 2007. "Hub-and-spoke network alliances and mergers: Price-location competition in the airline industry," Transportation Research Part B: Methodological, Elsevier, vol. 41(4), pages 394-409, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Corts, Kenneth S., 1998. "Conduct parameters and the measurement of market power," Journal of Econometrics, Elsevier, vol. 88(2), pages 227-250, November.
    2. Roller, Lars-Hendrik & Sickles, Robin C., 2000. "Capacity and product market competition: measuring market power in a 'puppy-dog' industry," International Journal of Industrial Organization, Elsevier, vol. 18(6), pages 845-865, August.
    3. Boyd, Roy G. & Jung, Chulho & Seldon, Barry J., 1995. "The market structure of the US aluminum industry," Journal of Economics and Business, Elsevier, vol. 47(3), pages 293-301, August.
    4. Dae‐Wook Kim & Christopher R. Knittel, 2006. "Biases In Static Oligopoly Models? Evidence From The California Electricity Market," Journal of Industrial Economics, Wiley Blackwell, vol. 54(4), pages 451-470, December.
    5. Karp, Larry S & Perloff, Jeffrey M, 1989. "Estimating Market Structure and Tax Incidence: The Japanese Television Market," Journal of Industrial Economics, Wiley Blackwell, vol. 37(3), pages 225-239, March.
    6. Holloway, Garth J., 1992. "The Representative Firm, Endogenous Output Decisions And Consistent Conjectural Variations In Oligopoly," Working Papers 225876, University of California, Davis, Department of Agricultural and Resource Economics.
    7. Thierry Chauveau & Dhafer Saidane, 1991. "Le pouvoir des banques sur le marché du crédit : essai de comparaison internationale," Revue de l'OFCE, Programme National Persée, vol. 35(1), pages 135-166.
    8. Bhattacharyya, Aditi & Kutlu, Levent & Sickles, Robin C., 2018. "Pricing Inputs and Outputs: Market prices versus shadow prices, market power, and welfare analysis," Working Papers 18-009, Rice University, Department of Economics.
    9. Paolo Angelini & Nicola Cetorelli, 1999. "Bank competition and regulatory reform: the case of the Italian banking industry," Working Paper Series WP-99-32, Federal Reserve Bank of Chicago.
    10. Devin Garcia & Levent Kutlu & Robin C. Sickles, 2022. "Market Structures in Production Economics," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 13, pages 537-574, Springer.
    11. Dae-Wook Kim & Christopher R. Knittel, 2004. "Biases in Static Oligopoly Models? Evidence from the California Electricity Market," NBER Working Papers 10895, National Bureau of Economic Research, Inc.
    12. Holloway, Garth J. & Hertel, Thomas W., 1991. "Comparing Hypotheses About Competition," Working Papers 225867, University of California, Davis, Department of Agricultural and Resource Economics.
    13. N/A, 1986. "Testing For Price Taking Behavior In Input Markets: An Application To The Meat Packing Industry," 1986 Annual Meeting, July 27-30, Reno, Nevada 278440, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Luis Orea & Jevgenijs Steinbuks, 2018. "Estimating Market Power In Homogenous Product Markets Using A Composed Error Model: Application To The California Electricity Market," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1296-1321, April.
    15. Fernandez-Cornejo, Jorge & Spielman, David J., 2002. "Concentration, Market Power, And Cost Efficiency In The Corn Seed Industry," 2002 Annual meeting, July 28-31, Long Beach, CA 19877, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Goddard, Ellen W. & Shank, Benjamin & Panter, Chris & Nilsson, Tomas K.H. & Cash, Sean B., 2007. "Canadian Chicken Industry: Consumer Preferences, Industry Structure and Producer Benefits from Investment in Research and Advertising," Project Report Series 52088, University of Alberta, Department of Resource Economics and Environmental Sociology.
    17. Chidmi, Benaissa, 2007. "Supermarkets Price Competition in Dallas - Fort Worth Fluid Milk Market," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9677, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. Goo, Moon Mo, 1997. "The measurement of market power: short-run, long-run, and dynamic adjustment models," ISU General Staff Papers 1997010108000012985, Iowa State University, Department of Economics.
    19. Isayenko Oleksiy & Maryanchyk Ivan, 2006. "Market power in oligopoly: The case of the Ukrainian cement industry," EERC Working Paper Series 06-06e, EERC Research Network, Russia and CIS.
    20. Jeffrey I. Bernstein & Pierre Mohnen, 1991. "Price-Cost Margins, Exports and Productivity Growth: With an Application to Canadian Industries," Canadian Journal of Economics, Canadian Economics Association, vol. 24(3), pages 638-659, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jomega:v:30:y:2002:i:1:p:33-44. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/375/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.