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Network competition and the difference in operating cost: Model analysis

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  • Takebayashi, Mikio

Abstract

In this paper, we propose a bi-level air transport market model which can handle the shape of network, airfare and service frequency as airline’s control variables and passenger’s behavior. We apply the model to the simple duopolistic market and observe how airlines change their network shape. We assume two types of airlines, the incumbent and the entrant, having different operating cost and conduct numerical computation. From the results, we discuss the features of network equilibrium considering difference in operating cost and confirm that inviting low cost carriers contributes to improving social welfare.

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  • Takebayashi, Mikio, 2013. "Network competition and the difference in operating cost: Model analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 57(C), pages 85-94.
    • Handle: RePEc:eee:transe:v:57:y:2013:i:c:p:85-94
    DOI: 10.1016/j.tre.2013.01.008
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    Cited by:

    1. Babić, Danica & Begović, Boris & Levajković, Tijana, 2023. "Probabilistic model for the impact of fear of flying on airline network structures," Journal of Air Transport Management, Elsevier, vol. 109(C).
    2. Hanaoka, Shinya & Takebayashi, Mikio & Ishikura, Tomoki & Saraswati, Batari, 2014. "Low-cost carriers versus full service carriers in ASEAN: The impact of liberalization policy on competition," Journal of Air Transport Management, Elsevier, vol. 40(C), pages 96-105.
    3. Takebayashi, Mikio, 2015. "Multiple hub network and high-speed railway: Connectivity, gateway, and airport leakage," Transportation Research Part A: Policy and Practice, Elsevier, vol. 79(C), pages 55-64.
    4. Takebayashi, Mikio, 2021. "Workability of a multiple-gateway airport system with a high-speed rail network," Transport Policy, Elsevier, vol. 107(C), pages 61-71.
    5. Takebayashi, Mikio & Onishi, Masamitsu, 2018. "Managing reliever gateway airports with high-speed rail network," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 133-146.
    6. Takebayashi, Mikio, 2018. "Managing airport charges under the multiple hub network with high speed rail: Considering capacity and gateway function," Transportation Research Part A: Policy and Practice, Elsevier, vol. 112(C), pages 108-123.
    7. Babić, Danica & Kalić, Milica, 2018. "Modeling the selection of airline network structure in a competitive environment," Journal of Air Transport Management, Elsevier, vol. 66(C), pages 42-52.
    8. Takebayashi, Mikio & Yamaguchi, Hiromichi, 2022. "Managing a multiple-gateway airport system with super high-speed rail," Journal of Air Transport Management, Elsevier, vol. 99(C).
    9. Takebayashi, Mikio, 2016. "How could the collaboration between airport and high speed rail affect the market?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 277-286.

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