Airline Route Structure Competition and Network Policy

Hugo Emilo Silva, Erik Verhoef and Vincent van den Berg
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Hugo Emilo Silva: VU University Amsterdam

No 13-189/VIII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This paper resulted in a publication in Transportation Research Part B: Methodological , 2014, 67, 320-343.

This paper studies whether a regulator needs to correct the route structure choice by carriers with market power in the presence of congestion externalities, in addition to correct their pricing. We account for passenger benefits from increased frequency, passenger connecting costs, airline endogenous hub location and route structure strategic competition. We find that, for some parameters, an instrument directly aimed at regulating route structure choice may be needed to maximize welfare, in addition to per-passenger and per-flight tolls designed to correct output inefficiencies. This holds true when the regulator is constrained to set non-negative tolls, but also for the case of unconstrained tolling.

Keywords: Route structure competition; Aviation policy; Hub-and-spoke networks; Fully-connected networks (search for similar items in EconPapers)
JEL-codes: H2 L13 L93 R4 (search for similar items in EconPapers)
Date: 2013-11-26
New Economics Papers: this item is included in nep-com, nep-net, nep-reg, nep-tre and nep-ure
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Journal Article: Airline route structure competition and network policy (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20130189

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