Exchanges of Cost Information in the Airline Industry
Olivier Armantier and
RAND Journal of Economics, 2003, vol. 34, issue 3, pages 461-77
We empirically analyze exchanges of cost information in a multimarket oligopoly model for the airline industry with entry and incomplete information on marginal costs. We develop an algorithm to solve the Nash equilibrium numerically. We estimate the structural model of supply decisions using data on the American Airlines and United Airlines duopoly at Chicago O'Hare airport. Our results provide probabilities of entry, expected quantities, prices, and profits in each market. Given the estimated parameters, we simulate competition under a hypothetical agreement to exchange cost information. We find that such exchanges would benefit airlines while only moderately costing consumers. Copyright 2003 by the RAND Corporation.
References: Add references at CitEc
Citations View citations in EconPapers (5) Track citations by RSS feed
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:rje:randje:v:34:y:2003:i:3:p:461-77
Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi
Access Statistics for this article
RAND Journal of Economics is currently edited by Autumn
More articles in RAND Journal of Economics from The RAND Corporation
Series data maintained by ().