MEASURING CONDUCT AND COST PARAMETERS IN THE SPANISH AIRLINE MARKET

Xavier Fageda
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Xavier Fageda: University of Barcelona

Industrial Organization from EconWPA

Abstract: This paper develops a model of airline competition. The model is based on a demand and pricing equation system, which is estimated for the Spanish airline market. The empirical implementation of the equation system relies on a simultaneous rather than a consecutive procedure. I test the explanatory power of alternative oligopoly models with capacity constraints. In addition, I analyze the degree of density economies. Results show that Spanish airlines conduct is less competitive than the Cournot solution. I also find evidence that thin routes can be considered as natural monopolies.

Keywords: Oligopoly; Air Transportation; Multiple Equation Models (search for similar items in EconPapers)
JEL-codes: L (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-mic
Date: Written 2005-11-16
Note: Type of Document - pdf; pages: 24
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