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Airline Deregulation, Competitive Environment and Safety

Author

Listed:
  • Andreas Papatheodorou
  • Nikos Platis

Abstract

Air traffic has substantially increased since the introduction of deregulation in both the USA and the European Union. Moreover, aircraft accidents involving fatalities have exhibited a downward trend over time. Still, a series of recently publicized accidents has raised again a serious issue, namely whether cost reduction in a deregulated aviation environment is achieved at the expense of safety standards. To address this question, the paper proposes a mathematical model, which highlights the relationship between competitive behaviour and tort liability. The model has important policy implications suggesting that the level of airline penalisation should be reduced when market rivalry is relaxed and conversely.

Suggested Citation

  • Andreas Papatheodorou & Nikos Platis, 2007. "Airline Deregulation, Competitive Environment and Safety," Rivista di Politica Economica, SIPI Spa, vol. 97(1), pages 221-242, January-F.
  • Handle: RePEc:rpo:ripoec:v:97:y:2007:i:1:p:221-242
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    References listed on IDEAS

    as
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    3. Robert D. Cooter, 1991. "Economic Theories of Legal Liability," Journal of Economic Perspectives, American Economic Association, vol. 5(3), pages 11-30, Summer.
    4. Nancy L. Rose, 1992. "Fear of Flying? Economic Analysis of Airline Safety," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 75-94, Spring.
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    6. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
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    More about this item

    JEL classification:

    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L59 - Industrial Organization - - Regulation and Industrial Policy - - - Other
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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