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Scheduled Service Versus Personal Transportation: The Role of Distance

  • Bilotkach, Volodymyr
  • Fageda, Xavier
  • Flores-Fillol, Ricardo

This paper presents a theoretical and empirical analysis of the relationship be- tween frequency of scheduled transportation services and their substitutability with personal transportation (using distance as a proxy). We study the interaction between a monopoly firm providing a high-speed scheduled service and private transportation (i.e., car). Interestingly, the carrier chooses to increase the frequency of service on longer routes when competing with personal transportation because by providing higher frequency (at extra cost) it can also charge higher fares which can boost its profits. However, in line with the results of earlier studies, frequency decreases for longer flights when driving is not a viable option. An empirical application of our analysis to the European airline industry confirms the predictions of our theoretical model. Keywords: short-haul routes; long-haul routes; flight frequency; distance JEL Classification Numbers: L13; L2; L93

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File URL: http://hdl.handle.net/2072/15846
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Paper provided by Universitat Rovira i Virgili, Department of Economics in its series Working Papers with number 2072/15846.

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Date of creation: 2009
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Handle: RePEc:urv:wpaper:2072/15846
Contact details of provider: Postal: Avda. de la Universitat,1 - 43204 Reus (Tarragona)
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  2. repec:cup:cbooks:9780521088206 is not listed on IDEAS
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  12. Voith, Richard, 1997. "Fares, Service Levels, and Demographics: What Determines Commuter Rail Ridership in the Long Run?," Journal of Urban Economics, Elsevier, vol. 41(2), pages 176-197, March.
  13. Brueckner, Jan K & Spiller, Pablo T, 1994. "Economies of Traffic Density in the Deregulated Airline Industry," Journal of Law and Economics, University of Chicago Press, vol. 37(2), pages 379-415, October.
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  18. Marin, Pedro L, 1995. "Competition in European Aviation: Pricing Policy and Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 43(2), pages 141-59, June.
  19. Bilotkach Volodymyr, 2009. "A Framework for Modeling "Real-Life" Airline Networks," Review of Network Economics, De Gruyter, vol. 8(3), pages 1-16, September.
  20. Xavier Fageda, 2006. "Measuring Conduct and Cost Parameters in the Spanish Airline Market," Review of Industrial Organization, Springer, vol. 28(4), pages 379-399, June.
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