Price and marginal cost effects of on-time performance: Evidence from the US airline industry

Jules Yimga

Journal of Air Transport Management, 2020, vol. 84, issue C

Abstract: We examine the impact of flight delay on market power in the U.S. airline industry. Consistent with the literature, our estimation results confirm that flight delays are associated with negative consumer welfare effects. Most importantly, we find that poor on-time performance negatively impacts product markup—proxy for market power. Furthermore, we are able to decompose these markup effects into price and marginal cost effects and evidence suggests that the source of these negative markup effects is primarily driven by negative price responses.

Keywords: Airlines; Market power; Flight delay; Consumer welfare; Nested logit (search for similar items in EconPapers)
JEL-codes: L13 L40 L93 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:84:y:2020:i:c:s0969699719304284

DOI: 10.1016/j.jairtraman.2020.101769

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