Market Incentives for Safe Commercial Airline Operation

Severin Borenstein and Martin B Zimmerman

American Economic Review, 1988, vol. 78, issue 5, 913-35

Abstract: Airlines are insured against most direct costs of an accident, but they cannot insure against demand loss. Some have argued that such consumer reaction will discipline unsafe operations. The authors' estimation of deviations from expected demand following accidents finds little or no effect prior to airline deregulation and weak indication of a response to recent crashes. These results are consistent with the changes the authors find in an airline's equity value following an accident, which are statistically significant, but quite small relative to the total social cost of the accident. Copyright 1988 by American Economic Association.

Date: 1988
References: Add references at CitEc
Citations: View citations in EconPapers (85)

Downloads: (external link)
http://links.jstor.org/sici?sici=0002-8282%2819881 ... O%3B2-8&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:78:y:1988:i:5:p:913-35

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().