Hub Premium, Airport Dominance and Market Power in the European Airline Industry

Enrico Bachis () and Claudio Piga ()
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Enrico Bachis: University of Nottingham

Rivista di Politica Economica, 2006, vol. 96, issue 5, pages 11-54

Abstract: This study addresses two issues relating to the pricing behaviour of European airlines: 1) whether an airline's dominant position at the origin airport, at the route and the city-pair level affects the airlines' market power; 2) whether fares follow a monotonic time path consistent with the pursuing of an inter-temporal price discrimination strategy. Our estimates reveal that enjoying a dominant position within a route is conducive to higher fares. On the contrary, dominance within a city-pair does not seem to facilitate the exercise of market power. We find robust support to the assumption that fares follow a monotonic time path.

JEL-codes: L11 L13 L93 (search for similar items in EconPapers)
Date: 2006
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Working Paper: Hub Premium, Airport Dominance and Market Power in the European Airline Industry (2007)
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