Market Structure and Multiple Equilibria in Airline Markets

Federico Ciliberto and Elie Tamer

Econometrica, 2009, vol. 77, issue 6, 1791-1828

Abstract: We provide a practical method to estimate the payoff functions of players in complete information, static, discrete games. With respect to the empirical literature on entry games originated by Bresnahan and Reiss (1990) and Berry (1992), the main novelty of our framework is to allow for general forms of heterogeneity across players without making equilibrium selection assumptions. We allow the effects that the entry of each individual airline has on the profits of its competitors, its "competitive effects," to differ across airlines. The identified features of the model are sets of parameters (partial identification) such that the choice probabilities predicted by the econometric model are consistent with the empirical choice probabilities estimated from the data. Copyright 2009 The Econometric Society.

Date: 2009
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Related works:
Working Paper: Market structure and multiple equilibria in airline markets (2009)
Working Paper: Market Structure and Multiple Equilibria in Airline Markets (2004)
Working Paper: Market Structure and Multiple Equilibria in Airline Markets (2004)
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