Market Structure and Competition in Airline Markets

Federico Ciliberto, , and ,
Authors registered in the RePEc Author Service: Charles Murry

No 13346, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We provide an econometric framework for estimating a game of simultaneous entry and pricing decisions while allowing for correlations between unobserved cost and demand shocks. We use our framework to account for selection in the pricing stage. We estimate the model using data from the US airline industry and find that not accounting for endogenous entry leads to biased estimation of demand elasticities. We simulate a merger between American and US Airways and find that product repositioning and post-merger outcomes depend on how we model the characteristics of the merged firm as a function of the pre-merger firms' characteristics.

Keywords: Multiple equilibria; market power; Self-selection; Entry; Oligopoly; Market structure; Merger (search for similar items in EconPapers)
JEL-codes: C35 C51 D43 L13 L41 L44 (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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