IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/101973.html

Appendix to “Cost pass-through in Commercial Aviation: Theory and Evidence” – Theoretical Derivations

Author

Listed:
  • Gayle, Philip
  • Lin, Ying

Abstract

This appendix serves as a supplement to “Cost Pass-through in Commercial Aviation: Theory and Evidence.” In this appendix we present the computational details of the theoretical model as well as the model predictions described in the text of the above-mentioned paper. Using a model of air travel demand and supply for an origin-destination market, we derive the closed-form expression for Nash equilibrium airfares, and use the closed-form expression to perform a series of comparative statics exercises. In particular, crucial expressions for obtaining predictions in Table 1 and Table 2 in the paper (Gayle and Lin, 2020) are provided.

Suggested Citation

  • Gayle, Philip & Lin, Ying, 2020. "Appendix to “Cost pass-through in Commercial Aviation: Theory and Evidence” – Theoretical Derivations," MPRA Paper 101973, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:101973
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/101973/1/MPRA_paper_101973.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Philip G. Gayle & Ying Lin, 2021. "Cost Pass‐Through In Commercial Aviation: Theory And Evidence," Economic Inquiry, Western Economic Association International, vol. 59(2), pages 803-828, April.
    2. Wang, X. Henry & Zhao, Jingang, 2007. "Welfare reductions from small cost reductions in differentiated oligopoly," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 173-185, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Haiwen Zhou, 2014. "Intermediate Inputs and External Economies," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 9(2), pages 216-239, June.
    2. Nakayama, Yuji, 2009. "The impact of e-commerce: It always benefits consumers, but may reduce social welfare," Japan and the World Economy, Elsevier, vol. 21(3), pages 239-247, August.
    3. Aymeric Lardon, 2019. "On the coalitional stability of monopoly power in differentiated Bertrand and Cournot oligopolies," Theory and Decision, Springer, vol. 87(4), pages 421-449, November.
    4. Jurgan, Jens, 2009. "Conjectural cost variations in a differentiated good oligopoly," W.E.P. - Würzburg Economic Papers 80, University of Würzburg, Department of Economics.
    5. Toshihiro Matsumura & Noriaki Matsushima, 2009. "A small firm leads to curious outcomes: Social surplus, consumer surplus, and R&D activities," ISER Discussion Paper 0742, Institute of Social and Economic Research, The University of Osaka.
    6. Picard, Pierre M. & Tampieri, Alessandro & Wan, Xi, 2025. "Liberalization and efficiency in slot-constrained airports," Transport Policy, Elsevier, vol. 163(C), pages 14-26.
    7. Choné, Philippe & Linnemer, Laurent, 2020. "Linear demand systems for differentiated goods: Overview and user’s guide," International Journal of Industrial Organization, Elsevier, vol. 73(C).
    8. Volker Nocke & Nicolas Schutz, 2018. "Multiproduct‐Firm Oligopoly: An Aggregative Games Approach," Econometrica, Econometric Society, vol. 86(2), pages 523-557, March.
    9. Philippe Choné & Laurent Linnemer, 2019. "The quasilinear quadratic utility model: an overview," CESifo Working Paper Series 7640, CESifo.
    10. Jens Jurgan, 2009. "Cost Variations in a Differentiated Good Oligopoly," Working Papers 069, Bavarian Graduate Program in Economics (BGPE).
    11. Susanne Wied-Nebbeling, 2007. "Fringe firms: Are they better off in a heterogeneous market?," Working Paper Series in Economics 31, University of Cologne, Department of Economics.
    12. X. Wang & Jingang Zhao, 2010. "Why are firms sometimes unwilling to reduce costs?," Journal of Economics, Springer, vol. 101(2), pages 103-124, October.
    13. António Brandão & Joana Pinho, 2018. "Productivity Shocks in a Union‐Duopoly Model," Manchester School, University of Manchester, vol. 86(6), pages 722-756, December.
    14. Haiwen Zhou, 2014. "International Trade with Increasing Returns in the Transportation Sector," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 9(4), pages 606-633, December.
    15. Céline Azémar & Rodolphe Desbordes & Paolo Melindi‐Ghidi & Jean‐Philippe Nicolaï, 2022. "Winners and losers of the COVID‐19 pandemic: An excess profits tax proposal," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(5), pages 1016-1038, October.
    16. Thijs Jansen & Arie Lier & Arjen Witteloostuijn, 2015. "Managerial delegation and welfare effects of cost reductions," Journal of Economics, Springer, vol. 116(1), pages 1-23, September.
    17. Dong, Chang & Atallah, Gamal & Galdo, Jose, 2025. "Cost pass-through in the U.S. aviation industry," Journal of Air Transport Management, Elsevier, vol. 127(C).
    18. Maximilian Koppenberg & Stefan Hirsch, 2022. "Markup estimation: A comparison of contemporary methods at the example of European food retailers," Agribusiness, John Wiley & Sons, Ltd., vol. 38(1), pages 108-133, January.
    19. Zhe Yang, 2025. "The cooperative analysis of oligopoly TU markets with infinitely many firms," Annals of Operations Research, Springer, vol. 345(1), pages 517-532, February.
    20. Hongkun Ma & Cheng-Zhong Qin & Chenhang Zeng, 2024. "Incentive and welfare implications of cross-holdings in oligopoly," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 77(4), pages 975-997, June.

    More about this item

    Keywords

    ;
    ;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:101973. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.