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Competition Regimes and Air Transport Costs: The Effects of Open Skies Agreement

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  • Micco, Alejandro
  • Serebrisky, Tomás

Abstract

The relevance of transport costs has increased as liberalization continues to reduce artificial barriers to trade. Is it worthwhile to implement policies designed to increase competition in transport markets? Focusing on air transport, this paper quantifies the effects of liberalization of air cargo markets on transport costs. Between 1990 and 2003, the United States implemented a series of Open Skies Agreements, providing a unique opportunity to assess the effect that a change in the competition regime has on prices. In our sample, Open Skies Agreements reduce air transport costs by 9% and increase by 7% the share of imports arriving by air. Those results hold for developed and upper-middle-income developing countries but for lower-middle-income and low-income developing countries Open Skies Agreements do not reduce. This paper was presented at the Fourth LAEBA Annual Meeting, held in Lima, Peru, on June 17, 2008.

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  • Micco, Alejandro & Serebrisky, Tomás, 2008. "Competition Regimes and Air Transport Costs: The Effects of Open Skies Agreement," IDB Publications (Working Papers) 3688, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:3688
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    1. Glick, Reuven & Rose, Andrew K., 2002. "Does a currency union affect trade? The time-series evidence," European Economic Review, Elsevier, vol. 46(6), pages 1125-1151, June.
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    3. Alejandro Micco & Ernesto H. Stein & Guillermo Luis Ordoñez, 2003. "The Currency Union Effect on Trade: Early Evidence from EMU," Research Department Publications 4339, Inter-American Development Bank, Research Department.
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    6. Alejandro Micco & Ernesto Stein & Guillermo Ordoñez, 2003. "The currency union effect on trade: early evidence from EMU [‘A theoretical foundation for the gravity equation’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 18(37), pages 315-356.
    7. repec:wbk:wbpubs:12425 is not listed on IDEAS
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    More about this item

    Keywords

    LAEBA; Transport costs; Air transport liberalization; Infrastructure; Trade; Regulatory quality; Open Skies Agreements;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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