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Asymmetric Regulation and Airport Dominance in International Aviation: Evidence from the London-new York Market

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  • Volodymyr Bilotkach

    () (Department of Economics, University of California, Irvine, 3151 Social Science Plaza, Irvine, CA 92697, USA)

Abstract

International airline markets have the rather unusual feature of partial deregulation with asymmetric regulatory constraints: Some carriers face entry restrictions different from others for a given route. Like domestic air travel, international travel also features hubs, where a single carrier may dominate a given airport. This article examines the effects of asymmetric regulation and airport dominance on airlines' fares in the London-New York market, a market uniquely suited for identifying the effects of both of these issues. Comparison data from the symmetrically regulated Frankfurt-New York and Paris-New York markets enable a difference-in-differences identification strategy. Regulatory restrictions are found to decrease an affected carrier's fares, whereas airport dominance increases a dominant airline's fares.

Suggested Citation

  • Volodymyr Bilotkach, 2007. "Asymmetric Regulation and Airport Dominance in International Aviation: Evidence from the London-new York Market," Southern Economic Journal, Southern Economic Association, vol. 74(2), pages 505-523, October.
  • Handle: RePEc:sej:ancoec:v:74:2:y:2007:p:505-523
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    Citations

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    Cited by:

    1. Volodymyr Bilotkach & Vivek Pai, 2016. "Hubs versus Airport Dominance," Transportation Science, INFORMS, vol. 50(1), pages 166-179, February.
    2. Bilotkach, Volodymyr & Gorodnichenko, Yuriy & Talavera, Oleksandr, 2010. "Are airlines' price-setting strategies different?," Journal of Air Transport Management, Elsevier, vol. 16(1), pages 1-6.
    3. G. de Jong & C.L. Behrens & H. van Herk & E.T. Verhoef, 2017. "Domestic Market Power in the International Airline Industry," Tinbergen Institute Discussion Papers 17-009/VIII, Tinbergen Institute, revised 20 Mar 2018.
    4. repec:eee:transa:v:103:y:2017:i:c:p:198-210 is not listed on IDEAS
    5. Escobari, Diego, 2017. "Airport, airline and departure time choice and substitution patterns: An empirical analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 103(C), pages 198-210.
    6. Polk, Andreas & Bilotkach, Volodymyr, 2013. "The assessment of market power of hub airports," Transport Policy, Elsevier, vol. 29(C), pages 29-37.
    7. Bilotkach, Volodymyr & Lakew, Paulos Ashebir, 2014. "On sources of market power in the airline industry: Panel data evidence from the US airports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 288-305.
    8. repec:eee:jaitra:v:64:y:2017:i:pa:p:55-59 is not listed on IDEAS

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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