IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20150075.html
   My bibliography  Save this paper

Measuring Competition Intensity; An Application to Air/HSR Transport Markets

Author

Listed:
  • Christiaan Behrens

    (VU University Amsterdam)

  • Mark Leijsen

    (VU University Amsterdam)

Abstract

We develop a method to measure the intensity of competition between firms. Our method, which we call the Best Response Measure (BRM), is related to the conduct parameter method, but avoids the main problems associated with that method. The BRM relies on a very general framework and limited data requirements. Moreover, we show that it provides valuable information in determining the relevant market. We illustrate how the BRM can be used in markets with imperfect substitutes and apply the method to aviation markets in the North Sea area. This also enables us to establish to what extent the high speed rail link between London and the European mainland affects the supply by air carriers.

Suggested Citation

  • Christiaan Behrens & Mark Leijsen, 2015. "Measuring Competition Intensity; An Application to Air/HSR Transport Markets," Tinbergen Institute Discussion Papers 15-075/VIII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20150075
    as

    Download full text from publisher

    File URL: https://papers.tinbergen.nl/15075.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dobruszkes, Frédéric & Dehon, Catherine & Givoni, Moshe, 2014. "Does European high-speed rail affect the current level of air services? An EU-wide analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 69(C), pages 461-475.
    2. Jan Boone, 2008. "A New Way to Measure Competition," Economic Journal, Royal Economic Society, vol. 118(531), pages 1245-1261, August.
    3. Marcucci, Edoardo & Gatta, Valerio, 2011. "Regional airport choice: Consumer behaviour and policy implications," Journal of Transport Geography, Elsevier, vol. 19(1), pages 70-84.
    4. Carbó, Santiago & Humphrey, David & Maudos, Joaquín & Molyneux, Philip, 2009. "Cross-country comparisons of competition and pricing power in European banking," Journal of International Money and Finance, Elsevier, vol. 28(1), pages 115-134, February.
    5. Xavier Fageda, 2006. "Measuring Conduct and Cost Parameters in the Spanish Airline Market," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 28(4), pages 379-399, June.
    6. Jan Boone, 2008. "A New Way to Measure Competition," Economic Journal, Royal Economic Society, vol. 118(531), pages 1245-1261, August.
    7. repec:bla:econom:v:43:y:1976:i:171:p:267-74 is not listed on IDEAS
    8. Schmalensee, Richard, 1989. "Inter-industry studies of structure and performance," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 16, pages 951-1009, Elsevier.
    9. Mar González-Savignat, 2004. "Competition in Air Transport," Journal of Transport Economics and Policy, University of Bath, vol. 38(1), pages 77-107, January.
    10. Thorsten Fischer & David R. Kamerschen, 2003. "Price-Cost Margins in the US Airline Industry using a Conjectural Variation Approach," Journal of Transport Economics and Policy, University of Bath, vol. 37(2), pages 227-259, May.
    11. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057, Elsevier.
    12. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    13. Behrens, Christiaan & Pels, Eric, 2012. "Intermodal competition in the London–Paris passenger market: High-Speed Rail and air transport," Journal of Urban Economics, Elsevier, vol. 71(3), pages 278-288.
    14. James A. Brander & Anming Zhang, 1990. "Market Conduct in the Airline Industry: An Empirical Investigation," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 567-583, Winter.
    15. Park, Yonghwa & Ha, Hun-Koo, 2006. "Analysis of the impact of high-speed railroad service on air transport demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 42(2), pages 95-104, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Valdes, Victor & Gillen, David, 2018. "The consumer welfare effects of slot concentration and reallocation: A study of Mexico City International Airport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 114(PA), pages 256-269.
    2. Mantin, Benny & Gillen, David & Delibasi, Tuba Toru, 2024. "Measuring the impact of scheduling overlap and market structure on prices: Evidence from the airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 183(C).

    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. Lijesen, Mark & Behrens, Christiaan, 2017. "The spatial scope of airline competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 99(C), pages 1-13.
    2. Schaeck, K. & Cihák, M., 2010. "Competition, Efficiency, and Soundness in Banking : An Industrial Organization Perspective," Discussion Paper 2010-68S, Tilburg University, Center for Economic Research.
    3. Ofelia Betancor & Juan Luis Jiménez, 2011. "When trains go faster than planes: the strategic reaction of airlines in Spain," ERSA conference papers ersa11p295, European Regional Science Association.
    4. Gu, Hongyi & Wan, Yulai, 2020. "Can entry of high-speed rail increase air traffic? Price competition, travel time difference and catchment expansion," Transport Policy, Elsevier, vol. 97(C), pages 55-72.
    5. Tabak, Benjamin M. & Gomes, Guilherme M.R. & da Silva Medeiros, Maurício, 2015. "The impact of market power at bank level in risk-taking: The Brazilian case," International Review of Financial Analysis, Elsevier, vol. 40(C), pages 154-165.
    6. Bergantino, Angela Stefania & Madio, Leonardo, 2020. "Intermodal competition and substitution. HSR versus air transport: Understanding the socio-economic determinants of modal choice," Research in Transportation Economics, Elsevier, vol. 79(C).
    7. D’Alfonso, Tiziana & Jiang, Changmin & Bracaglia, Valentina, 2016. "Air transport and high-speed rail competition: Environmental implications and mitigation strategies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 261-276.
    8. Jiang, Changmin & D'Alfonso, Tiziana & Wan, Yulai, 2017. "Air-rail cooperation: Partnership level, market structure and welfare implications," Transportation Research Part B: Methodological, Elsevier, vol. 104(C), pages 461-482.
    9. Jiang, Changmin & Zhang, Anming, 2014. "Effects of high-speed rail and airline cooperation under hub airport capacity constraint," Transportation Research Part B: Methodological, Elsevier, vol. 60(C), pages 33-49.
    10. Wajahat Azmi & Turkhan Ali Abdul Manap, 2017. "Competition, Banking Stability and Growth: Evidence from the dual banking system in OIC countries," Working Papers 2017-6, The Islamic Research and Teaching Institute (IRTI).
    11. Kouki, Imen & Al-Nasser, Amjad, 2017. "The implication of banking competition: Evidence from African countries," Research in International Business and Finance, Elsevier, vol. 39(PB), pages 878-895.
    12. Andrei Dubovik & Natasha Kalara, 2018. "Can we measure banking sector competition robustly?," CPB Discussion Paper 386.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    13. D’Alfonso, Tiziana & Jiang, Changmin & Bracaglia, Valentina, 2015. "Would competition between air transport and high-speed rail benefit environment and social welfare?," Transportation Research Part B: Methodological, Elsevier, vol. 74(C), pages 118-137.
    14. Flora Bellone & Patrick Musso & Lionel Nesta & Frédéric Warzynski, 2009. "L'effet pro-concurrentiel de l'intégration européenne. Une analyse de l'évolution des taux de marge dans les industries manufacturières françaises," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 139-163.
    15. Su, Min & Luan, Weixin & Fu, Xiaowen & Yang, Zaili & Zhang, Rui, 2020. "The competition effects of low-cost carriers and high-speed rail on the Chinese aviation market," Transport Policy, Elsevier, vol. 95(C), pages 37-46.
    16. Hideki Murakami, 2009. "Low-Cost Entry, Inter-Firm Rivalry, and Welfare Implications in US Large Air Markets," Discussion Papers 2009-25, Kobe University, Graduate School of Business Administration.
    17. Wan, Yulai & Ha, Hun-Koo & Yoshida, Yuichiro & Zhang, Anming, 2016. "Airlines’ reaction to high-speed rail entries: Empirical study of the Northeast Asian market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 532-557.
    18. Gu, Hongyi & Wan, Yulai, 2022. "Airline reactions to high-speed rail entry: Rail quality and market structure," Transportation Research Part A: Policy and Practice, Elsevier, vol. 165(C), pages 511-532.
    19. Mikael Juselius & Moshe Kim & Staffan Ringbom, 2015. "Do markup dynamics reflect fundamentals or changes in conduct?," Empirical Economics, Springer, vol. 48(3), pages 1119-1147, May.
    20. Alena Zemplinerova, 2010. "Competition policy and economic analysis: What can we learn from firm and industry data?," CERGE-EI Books, The Center for Economic Research and Graduate Education - Economics Institute, Prague, edition 1, number b07, May.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

    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:tin:wpaper:20150075. 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: Tinbergen Office +31 (0)10-4088900 (email available below). General contact details of provider: https://edirc.repec.org/data/tinbenl.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.