Measuring Conduct and Cost Parameters in the Spanish Airline Market

Measuring Conduct and Cost Parameters in the Spanish Airline Market This paper examines airline competition through an empirical specification of a demand and pricing equation system. The system is estimated for the Spanish airline market using a simultaneous procedure. The suitability of the Cournot assumption is tested in a competitive scenario characterized by an asymmetric oligopoly with capacity constraints. In addition, the degree of density economies is analyzed. Results show that Spanish airlines behave in a less competitive way than is implied by the Cournot solution. Finally, some evidence on the fact that thin routes can be considered as natural monopolies is found. Review of Industrial Organization Springer Journals

Measuring Conduct and Cost Parameters in the Spanish Airline Market

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Springer US
Copyright © 2006 by Springer
Economics; Industrial Organization; Microeconomics
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