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Corporate Failure, Supply Shocks and Government Bailouts: A Case Study of Aloha Airlines

Author

Listed:
  • Akihiko Kawaura

    () (Department of Policy Studies, Doshisha University)

Abstract

This paper investigates the bankruptcy of Aloha Airlines and its exit from Hawaii’s interisland passenger market in order to examine whether government intervention is warranted based on the presumed benefits to the general public. A regression analysis of interisland traffic volume does not identify any substantial decline in interisland passengers immediately following Aloha’s closure. A government’s decision to bailout a firm should incorporate information on market structure, as the presence of excess capacity can alleviate damage to consumers.

Suggested Citation

  • Akihiko Kawaura, 2011. "Corporate Failure, Supply Shocks and Government Bailouts: A Case Study of Aloha Airlines," Working Papers 201103, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:201103
    as

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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_11-3.pdf
    File Function: First version, 2011
    Download Restriction: no

    References listed on IDEAS

    as
    1. Cox, James C., 2010. "Some issues of methods, theories, and experimental designs," Journal of Economic Behavior & Organization, Elsevier, vol. 73(1), pages 24-28, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    bankruptcy; exit; excess capacity; bailout; airline;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • 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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