Deregulation and Schedule Competition in Simple Airline Networks
The present paper investigates the choice of route network, frequencies and ticket prices in air transport networks served by oligopolists. The paper describes these choices in a simple airline network by means of a simulation model. Airline competition is modeled as a 2 stage game: airlines first choose a particular flight schedule in a network, and in the second stage, airlines choose ticket prices. This simulation model thus describes airline profit maximizing behaviour in a given network environment. The model may now serve as a basis to address particular policy related questions. One such question is the welfare effect of airline deregulation. The welfare consequences resulting from the deregulation of airline markets have been investigated quite amply, both theoretically and empirically. In most cases, deregulation has been demonstrated to confer substantial benefits to consumers, and in some cases also to producers. At the same time, however, the external costs associated with aviation have become a major public policy concern in many countries. External effects - which in this case include noise, emissions and congestion - arise when markets lack: resources like peace and quiet, clean air and space are often unpriced. As a result, these resources are used in quantities beyond a social optimum. In the context of airline deregulation, it is now interesting to analyze the welfare effects caused the process of airline deregulation, taking the external costs of aviation into account. The present paper addresses this question while the network character of air transportation is taken into account.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Victor D. Norman & Siri Strandenes, 1994.
"Deregulation of Scandinavian Airlines: A Case Study of the Oslo-Stockholm Route,"
NBER Chapters,in: Empirical Studies of Strategic Trade Policy, pages 85-100
National Bureau of Economic Research, Inc.
- Norman, V.D. & Strandenes, S.P., 1990. "Deregulation Of Scandinavian Airlines - A Case Study Of The Oslo-Stockholm Route," Papers 04-90, Norwegian School of Economics and Business Administration-.
- Norman, Victor D & Strandenes, Siri Pettersen, 1990. "Deregulation of Scandinavian Airlines: A Case Study of the Oslo-Stockholm Route," CEPR Discussion Papers 403, C.E.P.R. Discussion Papers.
- Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, January.
- Martin J Osborne & Ariel Rubinstein, 2009. "A Course in Game Theory," Levine's Bibliography 814577000000000225, UCLA Department of Economics.
- Greenhut,Melvin L. & Norman,George & Hung,Chao-Shun, 1987. "The Economics of Imperfect Competition," Cambridge Books, Cambridge University Press, number 9780521315647, October.
- Brueckner, Jan K. & Spiller, Pablo T., 1991. "Competition and mergers in airline networks," International Journal of Industrial Organization, Elsevier, vol. 9(3), pages 323-342, September.
- Greenhut,Melvin L. & Norman,George & Hung,Chao-Shun, 1987. "The Economics of Imperfect Competition," Cambridge Books, Cambridge University Press, number 9780521305525, October. Full references (including those not matched with items on IDEAS)