Measuring Conduct and Cost Parameters in the Spanish Airline Market
This paper examines airline competition through an empirical specification of a demand and pricing equation system. The system is estimated for the Spanish airline market using a simultaneous procedure. The suitability of the Cournot assumption is tested in a competitive scenario characterized by an asymmetric oligopoly with capacity constraints. In addition, the degree of density economies is analyzed. Results show that Spanish airlines behave in a less competitive way than is implied by the Cournot solution. Finally, some evidence on the fact that thin routes can be considered as natural monopolies is found. Copyright Springer 2006
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