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Estimating The Effects Of Price Liberalization In China’S Aviation Industry

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  • JIAHUI CHEN

    (School of Economics, Zhejiang University, Hangzhou, Zhejiang, P. R. China)

  • LIMIN DU

    (School of Economics, Zhejiang University, Hangzhou, Zhejiang, P. R. China†Center for Research of Private Economy, Zhejiang University, Hangzhou, Zhejiang, P. R. China)

  • JINCHUAN SHI

    (School of Economics, Zhejiang University, Hangzhou, Zhejiang, P. R. China†Center for Research of Private Economy, Zhejiang University, Hangzhou, Zhejiang, P. R. China)

Abstract

China’s domestic aviation industry has undergone price liberalization reform via the deregulation of airfare since 2004. However, the impact of this policy has not been scientifically evaluated. This paper aims to analyze the effect of the 2017 price liberalization reform on airfares and identify the primary cause of this effect from the perspective of competition within the industry. Empirical results show that the liberalization of airfares leads to a significant increase in the average price of tickets. And the concentration of route markets plays a role in raising fares above the equilibrium level, which diminishes social welfare. Furthermore, heterogeneity analysis demonstrates that the liberalization policy has a greater impact on fares for long-haul routes, nonleisure routes and routes operated by carriers other than low-cost carriers (LCCs).

Suggested Citation

  • Jiahui Chen & Limin Du & Jinchuan Shi, 2025. "Estimating The Effects Of Price Liberalization In China’S Aviation Industry," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 70(06), pages 1497-1528, September.
    • Handle: RePEc:wsi:serxxx:v:70:y:2025:i:06:n:s0217590823500492
    DOI: 10.1142/S0217590823500492
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    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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