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This paper revisits the topic of the effect of airline competition on service quality, but allowing for nonlinear effects. Using a panel of monthly data for 5472 route-carrier combinations from 2005:4Q through 2012:4Q, we find that the average length of flight delays and cancellation rates increase with the concentration level. Worse service quality is linked to less competition. In addition, we find that the relationships between our measures of service quality and market concentration are nonlinear, so that the scale of the effects of a given change in airline competition appears to depend on the initial level of competition.
Review of Industrial Organization – Springer Journals
Published: Sep 22, 2016
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